Bitnomial Exchange Sues U.S. SEC, Alleging Regulatory Overreach

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Crypto exchange Bitnomial filed a suit against the U.S. Securities and Exchange Commission (SEC), saying the regulator overextended its jurisdiction in seeking to regulate a proposed XRP futures contract together with the Commodity Futures Trading Commission (CFTC).
“The SEC asserted that XRP Futures are security futures, which are subject to joint SEC and CFTC jurisdiction (unlike non-security futures which are subject only to the CFTC’s exclusive jurisdiction),” the company said in a Thursday filing with the U.S. District Court for the Northern District of Illinois. “The SEC further asserted that Bitnomial is required to comply with a host of additional SEC requirements before listing XRP Futures, including the significant task of registering as a national securities exchange (‘NSE’) and submitting to the SEC’s jurisdiction.”
In the filing the company said the futures fall solely in the CFTC’s remit and the SEC’s involvement would add significantly to the company’s regulatory burden. The exchange self-certified that the XRP futures did not violate the CFTC’s regulations on Aug. 9, it said.
“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,” it said in the filing.
Bitnomial’s case alleging SEC overreach follows a similar filing by Crypto.com on Tuesday. In that suit, the exchange said it was responding to a SEC warning that it was considering an enforcement action, and it was taking “a warranted response to the SEC’s regulation by enforcement regime which has hurt more than 50 million American crypto holders.”
The SEC has contended in the past that Ripple has violated securities laws by selling the XRP token.
In August a federal judge ruled that Ripple should pay $125 million after finding last year that the company had violated federal securities laws with its sale of XRP to institutional clients, but the judge said it selling XRP to retail clients through secondary markets didn’t violate those laws. The penalty was a fraction of the $2 billion that the SEC sought and the regulator is now appealing the case.
Update (Oct. 11 14:03 UTC): Adds last two paragraphs on SEC
Update (Oct. 11 14:38 UTC): Adds quote to 2nd par.
Edited by Sheldon Reback.

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Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.