Bitnomial's Lawsuit Against SEC

Crypto derivatives exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), its chair Gary Gensler, and four other commissioners, claiming that the agency had "inappropriate" jurisdiction over its XRP Futures product.

According to a court document filed on Thursday, Bitnomial asserts that the SEC claimed the exchange's upcoming XRP Futures product violated federal securities laws, categorizing XRP as an investment contract. The SEC suggested that the futures product required oversight from both the SEC and the Commodity Futures Trading Commission (CFTC).

> "Bitnomial disagrees with the SEC's view that XRP is an investment contract and, therefore, a security, thus categorizing XRP Futures as security futures," the company stated in the filing.

The firm contended that the SEC imposed additional requirements on XRP Futures, which had already received self-certification from the CFTC. One requirement mentioned involved a significant obligation for Bitnomial to register as a national securities exchange under SEC jurisdiction.

Bitnomial argued that the SEC effectively blocked the company from listing XRP Futures contracts, as the SEC mandates that the issuer of the underlying security must register with the agency before listing a security futures contract.

> "As the SEC knows, XRP, perceived as the underlying security, is not registered. Furthermore, Bitnomial is not the issuer of XRP and does not have the ability to register it," the filing indicated.

The exchange also highlighted the Southern District of New York court's decision to refute the SEC's classification of XRP as a security when traded on secondary markets.

The SEC did not immediately respond to requests for comments from The Block.

The XRP Dispute

The question of whether XRP is a financial security has been a topic of contention since the SEC accused Ripple, the issuer of XRP, in 2020 of raising $1.3 billion by selling unregistered securities.

In a ruling by Judge Analisa Torres of the Southern District Court of New York last year, it was concluded that Ripple’s "programmatic sales," which did not involve knowledge of the buyer's identity, did not breach securities laws. However, Judge Torres did find that Ripple's institutional sales of XRP were unlawful, resulting in a fine of $125 million, compared to the SEC's proposed $2 billion. Both parties claimed certain victories from the ruling.

The legal battle between Ripple and the SEC regarding XRP is ongoing. Recently, the SEC indicated it would appeal the decision from the Second Circuit Appeals Court. On the same day, Ripple filed a cross-appeal in the same court.