Bitnomial, a platform for trading cryptocurrency derivatives, has initiated legal proceedings against the U.S. Securities and Exchange Commission (SEC) concerning its jurisdiction over Ripple’s [XRP] futures contracts.
The exchange has contested the SEC’s assertion that XRP Futures should be categorized as ‘Security Futures,’ thereby placing them within the SEC’s regulatory purview.
A Recap of Ripple Labs vs. SEC Legal Battle
The ongoing legal battle between Ripple and the SEC regarding the status of XRP has been ongoing since 2020.
An important development came when Judge Analisa Torres recently determined that XRP itself does not meet all the criteria of the SEC’s Howey test. Consequently, this decision implies that secondary sales of XRP do not qualify as unregistered securities.
However, the SEC took the case to the next level on 2nd October by lodging an appeal, seeking to challenge Judge Torres’s ruling and overturn this pivotal decision.
The Current Scenario
In its latest lawsuit, Bitnomial claims that following its legal action, the SEC reached out to the exchange, insisting that XRP Futures contracts constitute ‘Security Futures’ and hence, are subject to dual oversight by the SEC and CFTC.
The SEC cautioned Bitnomial that moving forward with listing XRP Futures without meeting additional regulatory requirements would breach federal securities laws.
Additionally, the SEC mandated that Bitnomial must register as a national securities exchange to ensure compliance before offering XRP futures.
The lawsuit stated,
Insights from Industry Executives
Bitnomial’s legal move is not only aimed at seeking clarity on how XRP Futures are classified. The exchange is also seeking a court order to prevent the SEC from exerting regulatory authority over XRP Futures.
Therefore, Bitnomial is striving to obtain a ruling that not only confirms that XRP Futures do not fall under the category of ‘Security Futures,’ but also prohibits the SEC from taking any enforcement actions against the exchange in connection with its intended XRP Futures listings.
Addressing this issue, Bitnomial’s CEO Luke Hoersten stated to FOX Business,
“Establishing this precedent is not solely about XRP; it pertains to all digital assets. In contrast to other U.S. entities currently engaged in legal disputes with the SEC, Bitnomial has not been accused of any wrongdoing.”
He further added,
“As a result, we are uniquely positioned to push for a court ruling on whether XRP futures are classified as securities or commodities following the significant determination of XRP as a non-security in the Southern District of New York case.”
Impact on XRP’s Market Value
Despite the ongoing regulatory challenges, XRP has shown resilience in its price, recording a 1.55% increase in the past 24 hours. At the time of writing, it was trading at $0.5357, as per CoinMarketCap.
Unfortunately, since Gary Gensler assumed office in 2021, the SEC has ramped up its scrutiny on leading cryptocurrency entities, pursuing legal actions against firms like Coinbase, Ripple, and Uniswap, among others.
Recently, Crypto.com disclosed that it also initiated legal action against the SEC after receiving a Wells Notice, signaling potential regulatory charges.
These developments underscore the prevailing conflict between the SEC and the cryptocurrency sector, which continues to navigate through regulatory hurdles to sustain its market presence.