Crypto Derivatives Platform Bitnomial Sues SEC Over XRP Futures Classification

Crypto derivatives platform Bitnomial has taken legal action against the United States Securities and Exchange Commission (SEC) regarding the classification of XRP futures as securities. The lawsuit, filed on October 10 in an Illinois federal court, alleges that the SEC has overstepped its jurisdiction by claiming that XRP futures contracts fall under securities regulations.

Bitnomial’s Allegations Against the SEC

Bitnomial contends that the SEC is overreaching by asserting control over a product that is already regulated by the Commodity Futures Trading Commission (CFTC). According to Bitnomial, this interference not only duplicates regulatory efforts but also increases the burden on the platform.

In August, Bitnomial filed a self-certification with the CFTC, intending to list XRP futures contracts on its exchange. However, the SEC intervened, asserting that XRP futures are securities and that Bitnomial must register as a national securities exchange before offering these products. “The SEC has effectively blocked Bitnomial from listing XRP futures,” the filing states.

Regulatory Conflict and Legal Arguments

Bitnomial argues that it cannot comply with the SEC’s requirements because XRP, the underlying asset, is not registered as a security. Moreover, the exchange lacks the authority to register XRP as such. The platform also referenced a July 2023 ruling by New York District Court Judge Analisa Torres, which determined that institutional sales of XRP were securities transactions, whereas sales on secondary markets were not.

The lawsuit points to this court decision to challenge the SEC’s stance on XRP. Bitnomial seeks a court declaration that XRP futures are not securities and an injunction to prevent the SEC from enforcing its regulations on these contracts.

SEC’s Position and Industry Reaction

The SEC has consistently maintained that XRP is a security, arguing that Ripple’s sales of the digital asset should be subject to securities regulations. On October 2, the SEC announced its intention to appeal Judge Torres’ ruling. Ripple has contested the SEC’s position and filed a cross-appeal. Although Ripple previously agreed to pay a $125 million penalty to settle the initial case, the final resolution is pending due to the SEC’s ongoing appeal.

The SEC’s enforcement actions have faced industry-wide criticism, with many market participants arguing that the agency is overreaching by classifying most digital assets as securities. This legal battle between Bitnomial and the SEC is the latest example of the ongoing regulatory challenges in the cryptocurrency space.

#CryptoAssets #MarketTrends

Post Views: 2