By Mike Scarcella
Jenner & Block has moved to withdraw from representing CME Group's Chicago Mercantile Exchange in a closely watched lawsuit challenging the U.S. Commodity Futures Trading Commission's decision to allow prediction markets platform Kalshi and cryptocurrency exchange Coinbase to list perpetual futures.
In a last week in federal court in Washington, Jenner said unidentified “positional conflicts” with other clients required the firm's exit days after it lodged the lawsuit for CME NASDAQ:CME, a longtime client.
Jenner said the firm “is not withdrawing because of any issue regarding the merits of CME’s legal position in this matter or any disagreement with CME.” A positional conflict can arise when a law firm advances an argument for one client that undercuts its arguments for another.
Chicago-based Jenner, known for its regulatory and litigation work, did not elaborate on the nature of the conflicts, and the firm did not immediately respond to a request for more information.
CME Group, in a statement, said it was surprised to learn that Jenner "belatedly discovered apparent positional conflicts with other firm clients and withdrew at this stage" but that the development "has nothing to do with the merits of this case — a point they made clear themselves — and does not change our position or resolve."
Aitan Goelman of law firm Zuckerman Spaeder is now representing CME. Goelman, who led the CFTC's enforcement arm during the Obama administration, did not immediately respond to a request for comment.
Coinbase and Kalshi, which are not defendants in the lawsuit, did not immediately respond to requests for comment. The CFTC has called the lawsuit frivolous. The agency did not immediately respond to a request for comment.
CME’s case is being closely watched by exchanges and crypto-market participants because it challenges a CFTC action that could clear the way for broader use of perpetual futures contracts, which allow traders to maintain positions indefinitely without contract expirations.
In May, Coinbase and Kalshi launched perpetual crypto futures, bringing the products to U.S. investors through regulated domestic exchanges for the first time.
Perpetual futures, known as “perps,” have become a popular tool among crypto traders seeking to profit from price swings.
CME Group Chief Executive Terry Duffy last month criticized the CFTC's approval of perpetual futures, saying the agency had sidestepped its traditional review process for what CME considers a novel and complex product.
Read more:
CME sues US CFTC over letting Kalshi, Coinbase offer perpetual futures
CME Group's CEO, Duffy, warns of systemic risk from new crypto 'perps'
Coinbase, Kalshi bring regulated perpetual crypto futures to US investors