Crypto exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) over the classification of XRP as a security.

Bitnomial's Case Against SEC

Bitnomial filed the suit in an Illinois federal court, alleging that the SEC has overstepped its jurisdiction regarding digital assets. The exchange argues that XRP is already classified as a commodity by the Commodity Futures Trading Commission (CFTC) and should not fall under the SEC's regulatory purview. The lawsuit expresses Bitnomial's disagreement with the SEC's view that XRP is an investment contract and thus a security. In August, Bitnomial obtained approval from the CFTC to trade crypto futures and self-certified XRP futures contracts for listing. However, the SEC intervened, claiming these futures were securities.

Tensions Between SEC and Crypto Firms

Bitnomial's legal battle is part of a larger trend of increasing tension between the SEC and various crypto entities. Recently, Crypto.com also initiated legal action against the SEC, claiming the agency overstepped by labeling nearly all crypto transactions as securities. Ripple Labs, Binance, and Coinbase are among the prominent companies involved in legal disputes with the SEC. Bitnomial's CEO Luke Hoersten expressed confidence in their case, emphasizing that the unique nature of their lawsuit could set a legal precedent for the regulation of crypto derivatives.

SEC's Broader Enforcement Actions

On the same day Bitnomial filed its lawsuit, the SEC charged Cumberland for operating as an unregistered dealer since March 2018. The agency claims Cumberland has engaged in buying and selling crypto assets deemed securities without proper registration. A spokesperson for Cumberland criticized the charges as 'incredibly frustrating,' arguing the SEC's regulatory framework lacks clarity. Meanwhile, SEC Commissioner Mark Uyeda publicly criticized the agency's current approach to crypto regulation.

The legal battle between Bitnomial and the SEC could have significant implications for the regulation of crypto derivatives and highlights the ongoing challenges faced by crypto companies in the U.S.