Bitnomial sues US SEC over XRP futures product
Bitnomial claims that the U.S. Securities and Exchange Commission had "inappropriate" jurisdiction over its XRP Futures product and has sued the commission, its chair Gary Gensler, and four other commissioners.
Bitnomial Exchange, LLC has filed suit against SEC to prevent them overreaching their statutory authority and asserting joint jurisdiction over Bitnomial’s $XRP futures contracts, which are under the sole jurisdiction of the @CFTC.
Read about the complaint here:…— Bitnomial (@Bitnomial) October 11, 2024
SEC’s classify XRP as an investment contract
The SEC claimed that Bitnomial's yet-to-be listed XRP Futures product violated federal securities laws by classifying XRP as an investment contract, according to the court filing on Thursday. As reported by the agency, the Commodity Futures Trading Commission (CFTC) and the SEC must both supervise the futures product.
In the filing, Bitnomial stated that it disagrees with the SEC's view that XRP is an investment contract and, therefore, a security, and that XRP Futures are therefore security futures.
The firm argued that the agency had mandated that the company adhere to additional requirements for XRP Futures, which had already acquired self-certification from the CFTC. The "significant task" of registering as a national securities exchange under SEC jurisdiction was listed as one of the requirements, according to the filing.
Bitnomial also claimed that the SEC had actually stopped the company from listing XRP Futures contracts. According to SEC regulations, a security futures contract cannot be listed until the issuer of the underlying security has registered with the agency.
As far as the SEC is aware, XRP—which, in their opinion, is the underlying security—is not registered, according to the filing. Moreover, Bitnomial lacks the power to register XRP even if it so desires. It is not the issuer of XRP.
The court in the Southern District of New York rejected the SEC's position that XRP is a security when it is traded on a secondary market, as the crypto derivatives exchange also noted.
An overview of the XRP legal dispute
Since the SEC accused XRP issuer Ripple in 2020 of raising $1.3 billion by selling XRP as unregistered securities, there has been debate over whether the cryptocurrency is a financial security.
Judge Analisa Torres of the Southern District Court of New York announced last year that Ripple's "programmatic sales," in which the company had no idea who the buyer was, did not contravene securities laws. The institutional sales of XRP, however, were declared illegal securities sales by Judge Torres.
Therefore, in contrast to the SEC's proposed $2 billion fine, Ripple was fined $125 million. Following the decision, both parties declared victory. Additionally, the SEC's initial motion for remedies regarding Ripple's sale of the token XRP was partially granted and denied in the ruling.
Ongoing legal dispute between Ripple and the SEC on XRP
There is still a legal battle going on between Ripple and the SEC regarding XRP. Earlier this month, the SEC announced that it would appeal the Appeals Court for the Second Circuit's ruling. The same court received a cross-appeal from Ripple yesterday. A cross-appeal was filed by Ripple Labs in a case that was started nearly four years ago by the U.S. Securities and Exchange Commission.
The SEC has previously targeted cryptocurrency companies. Major players like Binance and Coinbase are also having difficulties, and Ripple is still defending itself.
There are others opposing the SEC besides Bitnomial. Additionally, Crypto.com filed a lawsuit against the regulator this week, claiming that it had overstepped itself by designating a number of tokens listed on the platform as securities.
Ripple CEO condemns SEC’s recent activities
The SEC's recent actions have also been denounced by Ripple CEO Brad Garlinghouse, particularly after the agency accused Chicago-based Cumberland DRW LLC of acting as an unregistered dealer in the cryptocurrency market. Cumberland allegedly carried out over $2 billion in securities-related transactions without the required registration, according to the SEC.
Disclaimer
This information should not be considered financial advice by any means. Please do your own research before making any investment decisions. The views in the articles are personal opinions only. Whale Insider is not responsible for any financial losses incurred.