Crypto derivatives exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), its chair Gary Gensler, and four other commissioners.
The lawsuit alleges that that the agency’s claim of jurisdiction over its XRP Futures product is “inappropriate.” It further argues that the SEC’s classification of XRP as a security led to unjust requirements for Bitnomial’s futures product.
According to the court document, the SEC asserted that Bitnomial’s proposed XRP Futures product violated federal securities laws by treating XRP as an investment contract. The SEC reportedly claimed that XRP Futures must be supervised by both the SEC and the Commodity Futures Trading Commission (CFTC).
Bitnomial disputes this view, stating that it does not agree with the SEC’s classification of XRP as a security. The exchange claims that because XRP is not a registered security, the SEC’s demands for it to register as a national securities exchange are both unreasonable and unattainable.
The exchange pointed out that the Southern District of New York court recently rejected the SEC’s interpretation that XRP is a security when traded on secondary markets.
Background on the XRP legal dispute
The legal battle over XRP’s classification has been a focal point in the crypto industry since 2020 when the SEC accused Ripple of raising $1.3 billion by selling unregistered securities. In 2022, a New York judge ruled that Ripple’s programmatic sales of XRP—where Ripple did not know the buyer’s identity—did not violate securities laws, while institutional sales were deemed unlawful.
Despite the mixed ruling, both Ripple and the SEC claimed partial victories. Ripple was fined $125 million, well below the SEC’s proposed $2 billion. The legal case remains active, with the SEC recently announcing its intention to appeal the decision to the Second Circuit Appeals Court, while Ripple has filed a cross-appeal.
The SEC previously sought an interlocutory appeal—a type of appeal that occurs while a case is still ongoing—arguing that it would help expedite the resolution of the case. Judge Torres denied this request, stating that the SEC did not prove that such an appeal would “materially advance the ultimate termination of the litigation.”
Bitnomial’s lawsuit against the SEC adds another layer to the ongoing debate over the regulation of XRP and the SEC’s jurisdiction in the crypto industry. The exchange is pushing back against the agency’s demand to treat its XRP Futures as security futures, arguing that the SEC’s stance effectively blocks its ability to list the product despite already receiving self-certification from the CFTC.
