The United States Securities and Exchange Commission (SEC) still thinks Ripple–affiliated cryptocurrency XRP is a security despite a judge declaring the token a non-security in a historic ruling in 2023.
Crypto derivatives exchange Bitnomial revealed this in a lawsuit filed against the SEC, its Chairman Gary Gensler, and four other commissioners for allegedly asserting their power over the company’s XRP Futures product.
Bitnomial Sues SEC Over Claim XRP Is A Security
Bitnomial is taking the SEC to court for “overextending its jurisdiction over digital assets” by claiming that XRP qualifies as a security.
Bitnomial claimed in a Thursday lawsuit filed in an Illinois federal court that the SEC proclaimed that the exchange’s yet-to-be-listed XRP Futures product broke federal securities laws, deeming XRP an investment contract. The regulator allegedly contended that futures products should be supervised by both the SEC and the Commodity Futures Trading Commission.
However, Bitnomial argued that XRP is already regulated as a commodity, and the agency’s assertion of its jurisdiction over it “inappropriately duplicates and compounds the regulatory burden on Bitnomial.”
Bitnomial filed a self-certification with the CFTC in August to list XRP futures on its exchange. However, the SEC reportedly contacted the exchange, and informed it that XRP futures are securities, thus requiring Bitnomial to register as a national securities exchange under SEC purview before introducing the products.
Bitnomial said it couldn’t “possibly comply” with the legal requirements to list XRP futures since the token’s issuer, Ripple, must first register it as a security, which it hasn’t. “The SEC has effectively blocked Bitnomial from listing XRP futures,” the derivatives exchange stated.
“Bitnomial disagrees with the SEC’s view that XRP is an investment contract and, therefore, a security, and that XRP futures are thus security futures,” the firm said in the complaint.
Bitnomial also highlighted the Southern District of New York court’s decision to reject the regulator’s view that XRP is a security when traded on secondary markets.
The XRP Conflict
Whether or not XRP qualifies as a security has been challenged since the SEC sued Ripple in December 2020 for allegedly raising $1.3 billion via the unregistered sale of the token.
Federal Judge Analisa Torres gave the crypto industry a shot in the arm last July when she handed Ripple a partial victory in its battle with the SEC. While Ripple broke federal securities law in selling XRP directly to institutional customers, it did not do so by putting XRP on exchanges for retail customers to buy, Judge Torres found. Ripple was subsequently slapped with a $125 million fine against the SEC’s initial $2 billion demand. The San Francisco-based fintech firm hailed the decision as a victory over the agency.
The protracted four-year tussle between the SEC and Ripple over XRP sales is still ongoing. Earlier this month, the SEC moved to appeal the decision, looking to overturn Judge Torres’ decision. Yesterday, Ripple filed a notice of cross-appeal against the SEC. On Twitter (aka X), the firm’s Chief Legal Officer Stuart Alderoty explained that the company’s cross-appeal was meant to “ensure nothing’s left on the table.”
The XRP price ticked higher after the cross-appeal, implying that the wider market sees Ripple’s legal move as a strong response to the SEC’s attempts to overturn the ruling.
XRP jumped by circa 2.9% over the past 24 hours to trade for $0.5396 as of press time.
