Bitnomial sues SEC over claim that XRP is a security

Crypto exchange Bitnomial sued the United States Securities and Exchange Commission and its five commissioners, accusing the agency of “overextending its jurisdiction over digital assets” by claiming that XRP is a security.

Bitnomial claimed in an Oct. 10 suit filed in an Illinois federal court that XRP (XRP $0.537) is already regulated as a commodity, and the SEC “asserts jurisdiction over a product that is already regulated by and subject to the exclusive jurisdiction of the Commodity Futures Trading Commission.” 

The exchange added; “In doing so, the SEC inappropriately duplicates and compounds the regulatory burden on Bitnomial.”

In August, Bitnomial — which the CFTC approved in 2020 to trade crypto futures — filed a self-certification with the CFTC to list XRP futures contracts on its exchange.

The exchange said the SEC contacted it and asserted that XRP futures are securities and required Bitnomial to register as a securities exchange before listing the products.

Bitnomial said it “cannot possibly comply” with the legal requirements to list XRP futures because the token’s issuer, Ripple Labs, must register it as a security, which it hasn’t.

“The SEC has effectively blocked Bitnomial from listing XRP futures,” it claimed.

An excerpt from Bitnomial’s filing claims the SEC “overextended” its authority. Source: PACER

Bitnomial also argued that a ruling in the SEC’s lawsuit against Ripple Labs rejected the regulator’s view that XRP traded on secondary markets is a security.

On Oct. 2, the SEC said it would appeal that decision, looking to overturn Judge Analisa Torres’ ruling.

Bitnomial is seeking a declaratory judgment that XRP futures are not securities and an injunction preventing the SEC from asserting jurisdiction over the derivatives products or pursuing enforcement action against the company for listing them.

Earlier in October, a Texan crypto startup filed a brief in an ongoing lawsuit with the regulator seeking a preliminary injunction to prevent the SEC from taking enforcement action should it list crypto on its planned exchange.

On Oct. 8, global digital asset exchange Crypto.com also sued the SEC after receiving a Wells notice stating that the SEC could bring enforcement action against the firm.

Bitnomial’s suit comes as investment firm Canary Capital filed with the SEC on Oct. 8 to launch a spot XRP exchange-traded fund (ETF), days after a similar bid from Bitwise.