Bitnomial Files Lawsuit Against SEC Over XRP ETF Classification

Bitnomial has filed a complaint alleging that the U.S. Securities and Exchange Commission (SEC) has overreached its jurisdiction, targeting the five commissioners in the case.

In its lawsuit, the company challenges the SEC’s designation of XRP as a security, arguing that the agency’s classification falls under the Securities Exchange Act’s definition of an investment contract.

Bitnomial Lawsuit Detail

In August, the Commodities Futures Trading Commission (CFTC) approved the Chicago-based exchange’s request to launch XRP US Dollar Futures. This came after a federal judge determined that XRP is not a security, in the long-running Ripple lawsuit

The SEC alerted the exchange shortly after filing that unless the company met further requirements, proceeding with the listing could breach federal securities laws. As part of this, a national securities exchange registration would be required.

The regulatory agency notified Bitnomial that listing XRP Futures would need compliance with securities regulations since they would fall under the joint jurisdiction of the SEC and CFTC and be designated as “security futures,” according to the court papers. Nevertheless, the Bitnomial has challenged that interpretation:

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

According to the firm, the SEC’s position goes beyond what the CFTC usually has control over. Therefore, it is requesting a ruling from the court that XRP Futures are not securities. The exchange would be shielded from SEC enforcement in this way.

Also, the company wants to stop the commission from claiming authority over XRP Futures and from pursuing any enforcement actions in connection with its potential listing in the future.

Implication For the Broader Crypto Industry

In a recent interview with FOX Business News, the CEO of Bitnomial Luke Hoersten said “Establishing this precedent is not just about XRP; it’s about all digital assets.”

He continued by saying that the company has a spotless compliance history, in contrast to other parties embroiled in litigation conflicts with the SEC. He claims that this puts them in a special position to ask the court to decide whether to classify XRP futures as securities or commodities.

This case comes after Crypto.com filed a similar lawsuit against the SEC after getting a Wells warning about possible enforcement action. The company also claims that by designating the majority of cryptocurrency assets as securities, the agency went outside its jurisdiction.

Additionally, the SEC just filed an appeal notice in the Ripple case. Canary Capital, an investment business, filed on October 8 to start an exchange-traded fund (ETF) for spot XRP. This comes after Bitwise made a similar suggestion a few days prior.

Conclusion

Bitnomial’s lawsuit against the U.S. Securities and Exchange Commission (SEC) adds to the growing tension between regulators and cryptocurrency firms, particularly over the classification of digital assets like XRP. Bitnomial argues that the SEC has overstepped its authority by treating XRP futures as “security futures” under the Securities Exchange Act, challenging the agency’s jurisdiction.

This legal battle reflects broader industry concerns about regulatory overreach, as other firms, such as Crypto.com, have similarly pushed back against the SEC’s approach. The outcome of this case could set a crucial precedent for the entire crypto industry, especially in how digital assets are regulated and categorized moving forward.