Bitnomial asserted that XRP is a security. The Bitnomial exchange sued the US Securities and exchange Commission and its five commissioners. Bitnomial alleged that the government had overextended its jurisdiction over digital assets.
The business contests XRP’s designation as a security by the SEC. The SEC claims that because of this classification, XRP is an investment contract under the Securities Exchange Act.
Bitnomial declared in an Oct 10 lawsuit that XRP is regulated as a commodity. The lawsuit was filed in an Illinois federal court. The SEC asserts jurisdiction over XRP, which is already regulated. The Commodity Futures Trading Commission has exclusive jurisdiction over the commodity XRP.
The Case Information
In August, the Commodity Futures Trading Commission (CFTC)-regulated Chicago-based exchange had asked to sell XRP US Dollar Futures. This came after the SEC’s case against Ripple resulted in a federal decision that XRP is not a security.
Proceeding with the listing might be against federal securities laws. To prevent such infractions, the company must adhere to extra regulations. Registering as a national securities exchange would be part of this.
According to a court document, Bitnomial was notified by the regulatory agency that listing XRP Futures would necessitate adherence to securities rules. The regulatory agency categorized XRP futures as “security futures” under joint SEC and CFTC jurisdiction, according to the court papers. But that interpretation has been contested by the exchange:
“Bitnomial challenges the SEC’s assertion that XRP is a security because it is an investment contract, and that XRP Futures are security futures as a result.”
Additionally, the business argues that the SEC’s position overreach into areas that the CFTC normally oversees.
Therefore, it is requesting a judicial ruling that XRP futures are not security futures. By doing this, the exchange would be shielded from SEC enforcement. Additionally, the company wants to stop the agency from claiming jurisdiction over XRP Futures or pursuing any enforcement measures in connection with their upcoming listing.
Industry-Wide Implications
In a conversation with FOX Business, Bitnomial CEO Luke Hoersten stated that establishing this precedent is about all digital assets, not only XRP.
Contrary to other firms engaged in legal conflicts with the SEC, he added, the firm has maintained a spotless compliance record.
Following a Wells notification indicating possible enforcement action, Crypto.com has filed a lawsuit against the SEC similarly.
In the Ripple case, the SEC also recently submitted a notice of appeal. Bitwise and Canary Capital, an investment firm, submitted applications to start a spot XRP exchange-traded fund (ETF).
