Outside Source
Crypto derivatives platform Bitnomial has sued the United States Securities and Exchange Commission over its claim that XRP futures are securities and subject to the agency’s jurisdiction.
In an Oct. 10 lawsuit filed with an Illinois federal court, Bitnomial alleges that the SEC has overextended its jurisdiction by claiming that XRP futures contracts are security futures.
The firm claims that the SEC is asserting its jurisdiction over a product “that is already regulated by and subject to the exclusive jurisdiction of the Commodity Futures Trading Commission.” As such, the agency’s interference duplicates and “compounds” the regulatory burden on Bitnomial.
Per the filing, Bitnomial filed a self-certification with the CFTC in August, intending to list XRP futures contracts on its exchange. However, the SEC contacted Bitnomial after the filing, claiming that XRP futures are securities and that the exchange must register as a national securities exchange before offering such products.
“The SEC has effectively blocked Bitnomial from listing XRP futures,” the filing reads.
Bitnomial argues that it cannot comply with the SEC’s requirements because XRP, as the underlying asset, is not registered as a security, and the exchange does not have the power to register it.
Further, the derivatives platform pointed to the July 2023 ruling by New York District Court Judge Analisa Torres, which concluded that while institutional sales of XRP were considered securities transactions, the token’s sales on secondary markets were not.
Bitnomial referenced this court decision in its lawsuit, arguing that the SEC’s position on XRP had already been challenged and partly rejected in court. It is currently seeking a court declaration that XRP futures are not securities and an injunction preventing the SEC from enforcing its regulations on the contracts.
Yet, the SEC has maintained that XRP is a security, arguing that Ripple’s sales of the digital asset should fall under securities regulations. On Oct. 2, the SEC announced it would appeal Judge Torres’ ruling.
Ripple, has contested the SEC’s stance and countered with a cross-appeal. The company previously agreed to pay a $125 million penalty to settle the initial case, but the final resolution remains pending due to the SEC’s appeal.
The SEC’s enforcement actions over the past years have faced industry-wide criticism, with market participants arguing that the agency is overreaching its authority by classifying most digital assets as securities.
This article first appeared at crypto.news
