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The Securities and Exchange Commission (SEC) charged Chicago-based crypto marketplace shaper Cumberland DRW for allegedly operating arsenic an unregistered securities trader connected Oct. 10.
According to the SEC’s complaint, Cumberland has traded implicit $2 cardinal successful crypto classified arsenic securities since astatine slightest March 2018.
The bureau alleges that these activities, conducted done Cumberland’s trading level Marea and implicit the phone, violated national securities laws intended to support investors.
Jorge G. Tenreiro, acting main of the SEC’s Crypto Assets and Cyber Unit, stated:
“The national securities laws necessitate each dealers successful each securities to registry with the Commission, and those who run successful the crypto plus markets are nary exception.”
Tenreiro besides addressed the crypto community’s claims that tokens should beryllium treated arsenic commodities, arguing that Cumberland’s actions treated the merchantability and connection of crypto arsenic securities, necessitating registration to guarantee capitalist protection.
Moreover, the ailment highlighted that the company’s self-described relation arsenic a starring liquidity supplier successful the crypto marketplace adds value to these claims.
As a effect of the alleged violations, the SEC seeks imperishable injunctive alleviation to halt these activities, the disgorgement of profits Cumberland allegedly gained unlawfully, positive prejudgment involvement and civilian penalties.
According to Cumberland’s website, the steadfast offers liquidity for over-the-counter (OTC) markets for antithetic cryptocurrencies, including stablecoins, arsenic good arsenic crypto derivatives and bilateral trading of crypto forwards.
Cumberland responds
In a statement posted connected X, Cumberland claimed that the SEC is trying to stifle innovation and forestall companies from engaging successful crypto.
The marketplace shaper stated that it would not alteration its operations pursuing the enforcement enactment by the US regulator. Cumberland added:
“We are assured successful our beardown compliance model and disciplined adherence to each known rules and regulations—even arsenic they person been a moving people (it wasn’t agelong agone ETH was claimed to beryllium a security).”
The papers besides highlighted that Cumberland acquired a broker-dealer registration successful 2019 done SEC Chairman Gary Gensler’s guidance. It further states that the marketplace shaper was warned that the licence is lone valid for Bitcoin (BTC) and Ethereum (ETH) trading.
Additionally, Cumberland stated that it has been successful talks with the regulator for the past 5 years astir its operations, which includes sharing written summaries and statements, arsenic good arsenic interviews with the firm’s personnel.
According to Cumberland:
“Today’s ailment is the archetypal clip the SEC has outlined the circumstantial transactions astatine issue.”
Notably, the papers besides cited the marketplace manipulation charges levied by the Commodity Futures Trading Commission (CFTC) against DRW successful November 2013, erstwhile Gensler served arsenic its Chair.
The lawsuit concluded successful December 2018, with Circuit Judge Richard Sullivan ruling that the CFTC failed to beryllium that DRW manipulated the marketplace and its claims were “based connected small much than an ‘earth is flat’-style conviction.”
Cumberland said the SEC’s latest enactment shows that registering arsenic a broker-dealer for integer assets successful the US is “just a mirage” and reaffirmed its volition to combat the lawsuit.
Nearly $100 cardinal successful assets
Cumberland presently holds implicit $81.5 million successful crypto, with astir of the funds — $44.2 cardinal — held successful Bitcoin, based connected Arkham Intelligence data.
The marketplace shaper besides holds astir $24 cardinal successful ETH and implicit $12 cardinal successful stablecoins divided betwixt Tether USD (USDT) and USD Coin (USDC).
Additionally, Cumberland holds $6.3 million successful AAVE and astir $9 cardinal successful cUNI, which are UNI tokens staked connected the wealth marketplace Compound, based on Nansen data.
The station SEC charges Cumberland DRW for unregistered securities trading successful $2B case appeared archetypal connected CryptoSlate.
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