Lawsuit could establish a precedent for classifying digital assets in the future.
- Bitnomial sued SEC over regulatory control of XRP Futures classification XRP’s price remained steady amid the SEC’s intensified scrutiny of major crypto entities
Bitnomial, a cryptocurrency derivatives exchange, has taken legal action against the U.S. Securities and Exchange Commission (SEC) over its regulatory authority for Ripple’s [XRP] futures contracts.
The exchange challenged the SEC’s position that XRP Futures fall under ‘Security Futures,’ which places them under its regulatory scope.
Ripple Labs vs. SEC: A brief history
Needless to say, the ongoing legal conflict between Ripple and the SEC over XRP’s status has been a long-running war that began in 2020.
Notably, Judge Analisa Torres recently ruled that XRP itself does not fulfill all criteria under the SEC’s Howey test. This meant that secondary sales of XRP are not considered unregistered securities.
However, on 2 October, the SEC escalated the case by filing an appeal, aiming to challenge Judge Torres’s decision and seeking a reversal of this critical ruling.
The present-day
Bitnomial in its recent lawsuit alleges that the SEC contacted the exchange soon after its filing, asserting that XRP Futures contracts fall under ‘Security Futures’ and are thus, subject to joint oversight by the SEC and CFTC.
The SEC warned Bitnomial that proceeding with the listing of XRP Futures without adhering to additional regulatory obligations would violate federal securities laws.
Furthermore, the SEC advised that Bitnomial would need to register as a national securities exchange to meet compliance requirements, before listing XRP futures.
The lawsuit stated,
Source: www.bitnomial.com
Execs weigh in…
Bitnomial’s legal action goes beyond seeking clarity on XRP Futures’ classification though. The exchange is also requesting a court order to prevent the SEC from asserting regulatory control over XRP Futures.
Hence, Bitnomial aims to secure a ruling that would not only confirm that XRP Futures are not ‘Security Futures,’ but would also block the SEC from initiating any enforcement actions against the exchange related to its planned XRP Futures offerings.
Remarking on the same, Bitnomial CEO Luke Hoersten told FOX Business,
“Establishing this precedent is not just about XRP; it’s about all digital assets. Unlike other U.S. businesses in litigation with the SEC, Bitnomial has not been accused of wrongdoing.”
He added,
“As such, we are in a unique position to push for a court decision on the securities or commodities classification of XRP futures following the landmark determination as a non-security in the Southern District of New York case.”
Impact on XRP’s price
Despite ongoing regulatory scrutiny, XRP’s price remained resilient, posting gains of 1.55% in the last 24 hours. It was trading at $0.5357 at press time, as per CoinMarketCap.
Unfortunately, since Gary Gensler’s appointment in 2021, the SEC has intensified its focus on prominent crypto entities. In doing so, it has taken legal action against firms such as Coinbase, Ripple, Uniswap, and many more.
Recently, Crypto.com disclosed that it too had filed a lawsuit against the SEC after receiving a Wells Notice—An indication of potential regulatory charges.
These actions highlight the ongoing conflict between the SEC and the cryptocurrency industry, which is fighting to maintain its market presence, despite rising regulatory challenges.
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