SEC Sues Cumberland DRW for Unregistered Crypto Dealer Activities
The United States Securities and Exchange Commission (SEC) filed charges against Cumberland DRW on October 10, alleging that it acted as an unregistered dealer. Since 2018, Cumberland has sold more than $2 billion in crypto assets in violation of federal registration requirements.
The SEC alleges that Cumberland acted as an unregistered dealer in proprietary trading (trading on its own accounts) and trading on third-party crypto asset exchanges. The agency seeks permanent injunctive relief, disgorgement of ill-gotten gains, injunctive relief and civil penalties.
Cumberland said he tried to sign up.
The SEC said the five Cumberland holdings were securities. Notably, Polygon (MATIC), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL). The agency has already identified all of these securities. According to the complaint:
In violation of Section 15(a) of the Securities Exchange Act of 1934, Cumberland acted as a securities dealer but failed to register as a securities dealer with the Commission.
In a statement posted on X, Cumberland countered that it registered as a dealer-broker in 2019, but confirmed that the registration only applied to Bitcoin (BTC) and Ether (ETH). The company also talked about other tokens:
“We have had five years of good faith discussions with the SEC on this point. […] Today's complaint is the first time the SEC has disclosed the specific transactions at issue.
Related: SEC Redefines ‘Distributor' Expands Regulation of Crypto, DeFi
The SEC agrees with Cumberland DRW. Source: Pacer
Responses to the SEC
Noting that the SEC's approach to digital assets is only a “recent target,” Cumberland struck a bold note:
“We will not make any changes to our business operations or assets as a result of this SEC action […] We are ready to defend ourselves again.
Source: Cumberland
Cumberland isn't the only SEC crypto target to respond boldly. After receiving Wells' notice warning of impending SEC legal action, Crypto.com sued the agency on October 8. It asked a Texas district court to declare, among other things, that Crypto.com is not a securities broker-dealer required to register under the Exchange Act.
Magazine: Godzilla vs. Kong: The SEC faces a tough battle with crypto legal firepower
