Ripple’s XRP Involved in Another Lawsuit Against the SEC: Details

Bitnomial has filed a lawsuit against the US Securities and Exchange Commission (SEC) and its five commissioners, accusing the agency of over-extending its jurisdiction.

The company’s case disputes the SEC’s classification of XRP as a security, which the agency claims qualifies as an investment contract under the Securities Exchange Act.

Details of the case

The Chicago-based exchange, which is regulated by the Commodity Futures Trading Commission (CFTC), had applied to offer XRP US dollar futures in August. This followed a federal ruling that XRP is not considered a security in the SEC’s lawsuit against Ripple.

Shortly after the filing, the SEC warned the stock exchange that moving forward with the listing could violate federal securities laws unless the company complies with additional requirements. This would include registering as a national stock exchange.

According to the court filing, the regulatory body informed Bitnomial that listing XRP futures would require compliance with securities laws, as they would be classified as “security futures” under the joint jurisdiction of the SEC and the CFTC. However, the exchange has objected to this interpretation:

“Bitnomial disagrees with the SEC’s view that XRP is an investment contract and therefore a security and that XRP futures are therefore security futures.”

The company also claims that the SEC’s position expands its jurisdiction in areas normally overseen by the CFTC.

As such, it is seeking a court declaration that XRP futures should not be classified as security futures. This would protect the exchange from SEC enforcement. The company also seeks to prevent the agency from asserting jurisdiction over XRP Futures or taking any enforcement action related to its future listing.

Industry-wide implications

“Setting this precedent isn’t just about XRP; it’s about all digital assets,” said Bitnomial CEO Luke Hoersten in an interview with FOX Business.

He added that the company, unlike others involved in legal disputes with the SEC, has maintained a clean compliance record. According to him, this puts them in a unique position to seek a court ruling on whether XRP futures should be classified as securities or commodities.

The case follows similar legal action by Crypto.com, which recently sued the SEC after receiving a notice from Wells indicating possible enforcement action. The firm has also accused the agency of overstepping its authority by classifying most crypto assets as securities.

The SEC also just filed a notice of appeal of Ripple’s lawsuit. Meanwhile, investment firm Canary Capital filed on October 8 to launch a cash XRP exchange-traded fund (ETF). This follows a similar proposal made by Bitwise a few days earlier.

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