Bitnomial takes SEC to court for classifying XRP futures as securities

by

As a seasoned researcher with a keen interest in the dynamic world of cryptocurrencies and their regulatory landscape, I find myself deeply intrigued by this legal battle between Bitnomial and the U.S. Securities and Exchange Commission (SEC). The case, in my view, is a testament to the ongoing struggle for clarity in the classification of digital assets and the boundaries of regulatory jurisdiction.

The cryptocurrency derivatives platform, Bitnomial, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), challenging the SEC’s assertion that XRP futures are classified as securities and fall under the commission’s oversight.

In a lawsuit filed on October 10th with a federal court in Illinois, Bitnomial claims that the Securities and Exchange Commission (SEC) is exceeding its authority by stating that XRP futures contracts are classified as security futures.

The company argues that the SEC is attempting to control a product which falls under the purview and sole authority of the Commodity Futures Trading Commission (CFTC). This action, they believe, unnecessarily overlaps and intensifies the regulatory obligations faced by Bitnomial.

According to the submitted documents, Bitnomial made a self-declaration to the CFTC in August, aiming to list XRP future contracts on its platform. Later, the SEC contacted Bitnomial following this declaration, stating that XRP futures are considered securities and that the exchange needs to register as a national securities exchange before it can offer such financial products.

“The SEC has effectively blocked Bitnomial from listing XRP futures,” the filing reads.

Biominal contends it cannot meet the Securities and Exchange Commission’s (SEC) stipulations since XRP, functioning as the base asset, has not been registered as a security. Consequently, the platform lacks the authority to register it.

Additionally, the derivatives platform highlighted the court decision made by Judge Analisa Torres in July 2023, where she determined that the sale of XRP by institutions was classified as a securities transaction. However, she stated that transactions involving the sale of XRP on secondary markets were not subject to this classification.

In its legal dispute, Bitnomial cited a previous court ruling to support their stance. They claim that the Securities and Exchange Commission’s (SEC) viewpoint on XRP had previously been questioned and partially overturned in court. At present, they are attempting to secure a court judgment stating that XRP futures contracts are not considered securities, and also an order preventing the SEC from implementing its regulations on these contracts.

Nevertheless, the Securities and Exchange Commission (SEC) continues to assert that XRP functions as a security, implying that transactions involving its sale should adhere to securities laws. On October 2nd, the SEC disclosed their intention to challenge Judge Torres’ decision.

Ripple is challenging the Securities and Exchange Commission’s (SEC) position by filing a cross-appeal. Initially, Ripple had agreed to pay a fine of $125 million as part of an earlier settlement. However, the final outcome is still undecided because the SEC has appealed the decision.

Over the past few years, the actions taken by the SEC regarding enforcement have been met with widespread critique across the industry. Critics argue that the agency has exceeded its jurisdiction by categorizing many digital assets as securities.

Read More

2024-10-11 09:42