Cumberland DRW Sued by SEC for Alleged Unregistered Cryptocurrency Dealer Operations
The U.S. Securities and SEC have filed a lawsuit against Cumberland DRW, claiming that the company is an unregistered cryptocurrency trader.
The U.S. Securities and SEC have filed a lawsuit against Cumberland DRW, claiming that the company is an unregistered cryptocurrency trader.
According to the SEC Cumberland has traded over two billion dollars in digital assets without being duly registered since 2018. Along with the lawsuit filed on October 10, 2024, Cumberland violated federal securities laws, which require all securities dealers to register.
SEC files a lawsuit against Cumberland DRW for allegedly operating as an unregistered securities dealer. pic.twitter.com/gXt2PD9wCv
— TFTC (@TFTC21) October 10, 2024
Cumberland is a famous bitcoin market maker that trades on other crypto exchanges in addition to its own accounts, which is why the SEC says it needs to register. The SEC has filed a lawsuit against the corporation, threatening civil fines, disgorgement of profits, prejudicial interest, and an injunction for life.
The five specific cryptocurrencies that are at issue in this lawsuit are Filecoin , Polygon, Solana , Cosmos , and Algorand the SEC considers to be securities all of them. A trader of these tokens is expected to follow the same rules that apply to stocks and bonds because the SEC previously considered them as securities. According to the Securities Exchange Act of 1934’s Article 15(a), Cumberland was in breach when it neglected to register as a securities dealer as said by the SEC’s complaint.
In response, Cumberland stated that it received agreement in 2019 to operate as a broker-dealer. The company made it clear that this registration was exclusive to Ether and Bitcoin, the two most popular cryptocurrencies and did not apply to the other tokens mentioned in the case. Cumberland expressed disappointment with the SEC, mentioning the fact that the agency had not previously revealed the specific transactions at issue in the legal dispute.
We have been having good-faith negotiations with the SEC on this matter for the past five years, Cumberland stated in a statement posted on the social media site X (previously Twitter). The SEC has not before described the precise transactions in question as part of its case today.”
— Cumberland (@CumberlandSays) October 10, 2024
Cumberland questioned the SEC’s broader strategy to regulating cryptocurrencies as well, emphasizing how challenging it is to follow changing regulations. While SEC Chairman Gary Gensler has urged businesses to “come in and register,” the company pointed out that they have been specifically forbidden from utilizing their broker-dealer registration for cryptocurrency assets other than Bitcoin and Ether.
Furthermore, Cumberland stressed that even in the face of regulatory uncertainty it is still confident in observing to all known norms and regulations.
The SEC claims that most crypto should be categorized as securities, and companies that trade in them are required to register with the organization. Yet, this stance has given rise to a number of legal disputes, as a number of crypto businesses including Coinbase, Binance and Kraken, have questioned the SEC’s jurisdiction.
Thus of the SEC’s complaint, Cumberland has declared that it would not alter its business practices or the assets for which it provides liquidity. While disputing the SEC’s accusations, the corporation insists that it adheres to a strict compliance structure and that business as usual would continue.
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