SEC Reasserts XRP as a Security Despite Court Ruling
The U.S. Securities and Exchange Commission (SEC) has once again classified XRP as a security, despite a previous ruling by a New York district court that stated otherwise. This new development came to light as part of a lawsuit filed by Bitnomial, a crypto derivatives exchange, against the SEC.
Bitnomial Sues the SEC Over XRP Futures Contract
Bitnomial, which filed the lawsuit in an Illinois district court, is challenging the SEC’s claim that it has regulatory authority over the exchange’s planned XRP Futures contract. Back in August, Bitnomial submitted an application to the U.S. Commodity Futures Trading Commission (CFTC), aiming to launch an XRP Futures contract.
This application followed the landmark ruling in the SEC v. Ripple case, where Judge Analisa Torres ruled that XRP itself is not a security, though some of Ripple’s institutional sales did constitute securities transactions.
SEC Insists on XRP’s Security Status
Despite the court’s ruling, the SEC contacted Bitnomial, asserting that the proposed XRP Futures contract falls under its jurisdiction, classifying it as a “security futures” product. The regulator warned Bitnomial that launching the XRP Futures contract without complying with its rules would be a violation of federal securities law.
SEC Backs Up Its Claim
Pro-XRP attorney Bill Morgan highlighted that Bitnomial’s lawsuit reveals new details about the SEC’s stance. On August 23, the SEC sent the exchange three summary judgment briefs from its case against Ripple to justify its claim that XRP is a security. These briefs argued that Ripple’s sales of XRP violated Section 5 of the Securities Act, using the Howey Test as the basis for their argument.
However, the SEC failed to mention Judge Torres’ final ruling, which contradicted this claim by determining that XRP itself is not an investment contract. Bitnomial criticized the SEC for selectively presenting its case while omitting the court’s ruling that largely dismissed XRP as a security.
Will the SEC Challenge XRP’s Non-Security Status?
Although the SEC has not yet formally filed its appeal, the agency is reportedly seeking to overturn parts of the Ripple ruling. This appeal has sparked speculation about whether the SEC will attempt to challenge XRP’s non-security status directly. However, during a previous appeal attempt in the Ripple case, the SEC admitted that XRP, as an asset, is merely computer code with no inherent value, which complicates the agency’s ability to label XRP as a security.
It remains uncertain whether the SEC will push forward with this argument in its ongoing legal battles, but Bitnomial’s lawsuit raises fresh questions about how the regulator will continue to approach XRP and other cryptocurrencies in the future.
Conclusion
This latest move by the SEC underscores the agency’s ongoing dispute over XRP’s classification, despite a court decision stating that XRP is not a security. As the case progresses, both the crypto industry and regulatory bodies are closely watching how this will impact future rulings and the broader regulatory landscape for digital assets. Whether the SEC’s appeal will succeed in altering XRP’s status remains to be seen, but the outcome will have major implications for crypto regulation and market participants.
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