Case 2:25-cv-00978-APG-BNW Document 42 Filed 08/04/25 Page 16 of 26
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Allowing Nevada to impose its own laws on federally regulated exchanges would “disrupt[] ‘the congressional calibration of force.’” Valle del Sol , 732 F.3d at 1027 (quoting Crosby , 530 U.S. at 380). The NGCB’s cease-and-desist order asserts that CDNA’s activities are “in violation of Nevada law” and expressly reserves the rights of itself and other Nevada authorities “to pursue criminal and civil actions based on [CDNA’s] past and future conduct within the state.” Compl. Ex. A, at 2. One example of a statute NGCB alleges CDNA to be violating is Nevada Revised Statutes (“NRS”) § 463.160—a willful violation of which is a category B felony for which an offender “ shall be punished” by one to ten years imprisonment and/or a fine of up to $50,000. NRS § 463.360(3) (emphasis added). Absent preemption, the federal enforcement regime enacted by Congress would be frustrated by state-imposed civil and criminal sanctions. See Crosby , 530 U.S. at 373–74 (finding conflict preemption where state law “undermin[ed]” Congress’s “delegation of effective discretion” to the executive). Courts have recognized conflict preemption where state discipline and enforcement regimes diverge from the federal scheme, and this Court should do the same. See, e.g., Bibbo v. Dean Witter Reynolds, Inc. , 151 F.3d 559, 563–64 (6th Cir. 1998) (holding CEA preempted state law requiring certain payments to investors because it conflicted with a CFTC regulation); Effex Cap., LLC v. Nat’l Futures Ass’n , 933 F.3d 882, 893– 94 (7th Cir. 2019) (holding CEA preempted state law defamation claim against registered futures association because it would “impair[] significantly” the CEA’s comprehensive regulation of self- regulatory organizations). Third , the NGCB’s order is incompatible with the CFTC Core Principles that underpin CDNA’s status as a DCM. See Kalshi v. Hendrick I , 2025 WL 1073495, at *7 (noting the “potential existential threat” that if Kalshi disrupted contracts or geographically limited access to its national exchange, the CFTC could find Kalshi to have violated the CFTC’s Core Principles). The CFTC’s Core Principle 2 requires CDNA to “provide its members . . . with impartial access to its markets and services.” 17 C.F.R. §§ 38.150, 38.151(b) (emphasis added). Evicting users from the contract market and terminating their contracts based on their location within the State of Nevada would not be providing “impartial access.” Core Principle 4 requires CDNA to “establish and maintain risk control mechanisms to prevent and reduce the potential risk of price distortions
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