SEC Faces Lawsuit from Bitnomial over XRP’s Security Status

• Bitnomial sues SEC, claiming XRP is a commodity already regulated by the CFTC.
• The SEC blocked Bitnomial from listing XRP futures, labeling the product as a security.
• The firm says Ripple Labs has not registered XRP as a security, hence compliance is impossible.

Bitnomial, a Chicago-based cryptocurrency exchange, has filed a lawsuit against the United States Securities and Exchange Commission (SEC). According to a report shared by Fox Business’ Eleanor Terrett, the exchange claimed the SEC is overstepping its jurisdiction by labeling XRP, the cryptocurrency issued by Ripple Labs, as a security. 

SCOOP: Bitnomial sues SEC over XRP futures, challenges agency's continued claim that XRP is a security

Crypto derivatives exchange @Bitnomial is suing the @SECGov over the agency’s claim that it has authority over its planned $XRP Futures contract.https://t.co/oN8GyanG1m

— Eleanor Terrett (@EleanorTerrett) October 11, 2024

Filed in an Illinois federal court on October 10, the lawsuit argued that XRP is already considered a commodity. Therefore, it should be regulated by the Commodity Futures Trading Commission (CFTC). Bitnomial accused the SEC of creating unnecessary regulatory challenges by overlapping with CFTC oversight.

Dispute Over XRP’s Classification

The conflict revolves around XRP’s classification in the cryptocurrency market. Bitnomial received CFTC approval in 2020 to trade cryptocurrency futures. In August 2024, it filed a self-certification to list XRP futures on its platform. However, the SEC stepped in, arguing that XRP futures are securities. 

The SEC required Bitnomial to register as a securities exchange before it could list XRP futures for trading. Bitnomial claimed it cannot meet this requirement because Ripple Labs has not registered XRP as a security. This legal obstacle, according to the exchange, has made listing XRP futures impossible.

Bitnomial’s Legal Standpoint

Bitnomial argued that the SEC’s involvement is preventing it from offering XRP futures. The exchange believes the SEC is duplicating regulatory oversight, causing operational delays. Additionally, Bitnomial referenced the SEC’s ongoing lawsuit against Ripple Labs. 

A recent court ruling from Judge Analisa Torres stated that XRP, when traded on secondary markets, does not qualify as a security. The SEC has filed an appeal to this decision. Bitnomial’s suit claimed the SEC’s position contradicts this ruling and is adding unnecessary legal complications.

Ripple Effect Across the Industry

Bitnomial’s legal challenge is part of a broader wave of resistance within the cryptocurrency industry. On October 8, global digital asset exchange Crypto.com also filed a lawsuit against the SEC. The exchange was responding to a Wells notice indicating possible enforcement action.

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