Bitnomial Files Lawsuit Against SEC Regarding XRP Futures Designation as ‘Security Futures’

Bitnomial, a digital asset derivatives exchange based in Chicago, has launched a lawsuit against the U.S. Securities and Exchange Commission (SEC), contesting the agency’s assertion that XRP futures are categorized as “security futures.”

This conflict emerged after Bitnomial, which operates under the oversight of the Commodity Futures Trading Commission (CFTC), self-certified its XRP U.S. Dollar Futures contract in August, as reported by Fox Business.

The certification came after the conclusion of the notable SEC vs. Ripple case, which examined whether XRP is classified as a security.

Bitnomial Introduces Futures Contract Linked to XRP

Through the certification process, Bitnomial was able to list and trade the futures contract without needing explicit approval from the CFTC, as the product was considered compliant with regulatory requirements under commodity legislation.

However, the SEC intervened shortly after the certification, claiming that XRP futures should be regarded as “security futures,” thus requiring oversight from both the SEC and CFTC.

The SEC indicated that Bitnomial would violate federal securities laws if it moved forward with listing the product without further regulatory adherence.

Specifically, the SEC insisted that Bitnomial must register as a national securities exchange prior to offering XRP futures to its customers.

In retaliation, Bitnomial initiated a lawsuit to dispute the SEC’s classification of XRP as a security, which subsequently influences the regulatory framework for XRP futures contracts.

The exchange contends that its product should not be subject to SEC jurisdiction, arguing that XRP should not be classified as a security.

“Bitnomial disagrees with the SEC’s perspective that XRP is an investment contract and, consequently, a security, and that XRP Futures are therefore security futures,” the company articulated in its legal submission.

Luke Hoersten, CEO of Bitnomial, highlighted the significance of this legal dispute, asserting that the exchange’s strong compliance history bolsters its case against the SEC.

Hoersten posits that a court decision in this matter could establish an important precedent regarding the regulation of crypto derivatives such as XRP futures in the United States.

Crypto.com Also Takes Legal Action Against SEC

Bitnomial’s lawsuit closely follows Crypto.com’s legal challenge against the SEC.

Crypto.com, a prominent global crypto exchange, recently filed a lawsuit against the SEC after receiving a Wells notice—a formal alert regarding potential enforcement actions.

The firm accused the SEC of exceeding its jurisdiction by categorizing the majority of crypto assets as securities.

Since the beginning of 2023, the SEC has intensified its enforcement efforts against the crypto sector, targeting firms such as Consensys, Uniswap Labs, and OpenSea.

The list of entities under investigation also features notable companies like Ripple Labs, Binance, and Coinbase, all of which are currently involved in legal conflicts with the regulator.

Ripple, which has been engaged in a legal struggle with the SEC for over three years, recently submitted a notice of appeal to contest certain aspects of the court’s ruling in the initial case.

In July of last year, Judge Analisa Torres determined that Ripple’s sales of XRP to retail investors did not constitute securities transactions, while institutional sales did.

Although Ripple was ordered to pay $125 million to resolve the issue, the case is still ongoing, as both parties continue to pursue additional legal avenues.

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