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Cryptocurrency exchange Bitnomial has reportedly taken legal action against the U.S. Securities and Exchange Commission (SEC), accusing the regulatory body of overstepping its authority in declaring XRP as a security.
In a lawsuit filed on October 10 in an Illinois federal court, Bitnomial argues that XRP, the digital asset tied to Ripple Labs, is already regulated as a commodity and falls under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). The exchange alleges that the SEC’s claims are imposing unnecessary regulatory burdens on the platform.
Bitnomial’s case revolves around its recent effort to list XRP futures contracts on its exchange. The CFTC approved Bitnomial to trade crypto futures in 2020, and in August, the platform self-certified its intentions to include XRP futures.
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However, the SEC allegedly stepped in, asserting that XRP futures were securities and required Bitnomial to register as a securities exchange before listing these products. This action, Bitnomial claims, has effectively prevented the company from moving forward with its plans.
XRP Status Sparks Legal Showdown
Bitnomial’s lawsuit also highlights the ongoing legal battle between Ripple Labs and the SEC, where the commission maintains that XRP should be classified as a security. Earlier this year, a major ruling in the case appeared to support the view that XRP traded on secondary markets is not a security, a position the SEC has since appealed.
For Bitnomial, the implications of this ongoing debate are clear. The exchange argues that it cannot comply with the SEC’s demands, as Ripple Labs—the issuer of XRP—has not registered the token as a security.
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In its lawsuit, Bitnomial is seeking a declaratory judgment that XRP futures are not securities, alongside an injunction to prevent the SEC from enforcing its jurisdiction over these derivatives. Bitnomial contends that the regulatory confusion caused by the SEC’s actions has led to unnecessary complications for platforms trying to offer XRP-related products.
Regulatory Challenges
Bitnomial’s legal challenge comes amidst a broader wave of regulatory scrutiny directed at the crypto industry. In early October, global digital asset exchange Crypto.com filed its own lawsuit against the SEC, after receiving a Wells notice warning of potential enforcement action.
Meanwhile, a Texas-based crypto startup is similarly seeking an injunction against the SEC to prevent regulatory action as it prepares to launch its own platform.
