Bitnomial Challenges SEC’s Jurisdiction Over XRP Futures in Landmark Lawsuit
In a bold move that could have far-reaching implications for the cryptocurrency industry, Chicago-based digital asset derivatives exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC). The suit, filed on October 10, 2024, in an Illinois federal court, challenges the SEC’s assertion that XRP futures fall under the category of “security futures” and are thus subject to the agency’s jurisdiction.
The legal action stems from Bitnomial’s attempt to list XRP U.S. Dollar Futures contracts on its platform. In August, the exchange self-certified the product with the Commodity Futures Trading Commission (CFTC), a process that typically allows for listing without explicit CFTC approval if the product meets regulatory standards under commodity laws.
However, the SEC swiftly intervened, contending that XRP futures should be classified as security futures, requiring oversight from both the SEC and CFTC. The agency demanded that Bitnomial register as a national securities exchange before offering the product, effectively blocking its listing.
Bitnomial CEO Luke Hoersten emphasized the significance of this legal battle, stating, “Establishing this precedent is not just about XRP; it’s about all digital assets. We are in a unique position to push for a court decision on the securities or commodities classification of XRP futures.”
The exchange argues that the SEC is overextending its jurisdiction by claiming authority over a product already regulated by the CFTC. “Bitnomial disagrees with the SEC’s view that XRP is an investment contract and, therefore, a security, and that XRP Futures are thus security futures,” the company stated in its legal filing.
This lawsuit comes in the wake of the high-profile SEC vs. Ripple case, where a federal judge ruled in July 2023 that XRP sales on secondary markets did not constitute securities transactions. Despite this ruling, the SEC has maintained its stance on XRP’s security status, recently filing a notice of appeal in the Ripple case.
The crypto industry has long criticized the SEC’s approach to digital asset regulation, with many arguing that the agency is overreaching its authority. This sentiment was echoed in a similar lawsuit filed by Crypto.com against the SEC earlier this week, challenging the regulator’s classification of most crypto assets as securities.
Bitnomial is seeking a declaratory judgment that XRP futures are not securities and an injunction to prevent the SEC from asserting jurisdiction over these derivative products or pursuing enforcement action against the company for listing them.
