Crypto exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), challenging the agency’s claim that XRP is a security. The suit, submitted on October 10 in an Illinois federal court, accuses the SEC of overstepping its regulatory boundaries regarding digital assets.
Bitnomial’s Argument: XRP Is a Commodity
In its filing, Bitnomial argues that XRP is already regulated as a commodity under the Commodity Futures Trading Commission (CFTC). It claims the SEC’s efforts to regulate XRP as a security create unnecessary and overlapping regulatory challenges. “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 stated.
The firm contends that the SEC’s interference “duplicates and compounds the regulatory burden” for the company. Bitnomial received CFTC approval to trade crypto futures in 2020 and filed a self-certification in August to list XRP futures contracts. However, the SEC insisted that these contracts are securities, requiring Bitnomial to register as a securities exchange before moving forward.
Regulatory Conflict and Legal Roadblocks
Bitnomial argues that complying with the SEC’s demands is impossible without Ripple Labs, the issuer of XRP, registering the token as a security. Since Ripple has not done so, Bitnomial claims the SEC’s actions have “effectively blocked” it from offering XRP futures on its platform.
The exchange further points to the recent ruling in the SEC’s lawsuit against Ripple Labs, which concluded that XRP traded on secondary markets does not qualify as a security. Despite this, the SEC announced on October 2 that it plans to appeal the decision, seeking to overturn Judge Analisa Torres’ ruling.
Seeking Legal Relief
Bitnomial’s lawsuit aims to secure a declaratory judgment confirming that XRP futures are not securities. The exchange also seeks an injunction to prevent the SEC from asserting regulatory control over its XRP derivative products or taking enforcement actions if the company lists them.
Broader Industry Pushback Against the SEC
Bitnomial’s lawsuit follows a series of similar legal actions against the SEC. Earlier in October, a Texas-based crypto startup filed a motion for a preliminary injunction to block potential SEC enforcement if it proceeds with listing digital assets on its upcoming platform. On October 8, Crypto.com also took legal action after receiving a Wells notice, indicating possible enforcement action from the SEC.
Meanwhile, Canary Capital, an investment firm, filed with the SEC on October 8 to launch a spot XRP exchange-traded fund (ETF). This move came shortly after a similar filing from Bitwise, reflecting the growing tension between crypto firms and the SEC over the classification and regulation of XRP.
