[NEWS] SEC sues Cumberland DRW for $2 billion in unlicensed crypto securities transactions

The SEC filed a lawsuit against cryptocurrency market maker Cumberland DRW on the 10th for operating as an unregistered dealer.

According to the SEC statement, Cumberland DRW operated as an unregistered dealer in more than $2 billion in cryptocurrency offered and sold as securities, in violation of the registration requirements of the federal securities laws, which are designed to protect investors. Cumberland bought and sold cryptocurrency offered and sold as securities in its own accounts as part of its regular business from March 2018 to the present.

Cumberland calls itself the "world's leading liquidity provider" of cryptocurrency and operates 24 hours a day, 7 days a week by trading with counterparties through its online trading platform, Marea. The SEC further alleges that Cumberland engaged in trading cryptocurrency offered and sold as investment contracts on third-party cryptocurrency exchanges as part of its regular business.

"Despite frequent industry protestations that the sale of crypto assets is akin to the sale of commodities, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offerings and sales of the crypto assets at issue in this case as investments in securities, and Cumberland profited from its dealer activities in these assets without providing investors and the market with the important protections afforded by registration," Jorge G Tenreiro, acting chief of the SEC's Crypto Assets and Cyber ​​Security Unit (CACU), said in a statement.

The SEC's complaint, filed in the U.S. District Court for the Northern District of Illinois, alleges that Cumberland violated Section 15(a) of the Securities Exchange Act of 1934 and seeks a permanent injunction, disgorgement, prejudgment interest, and civil penalties.

Cumberland, meanwhile, has taken a defiant stance against the SEC. In a statement, the company said: "We are not making any changes to our business. We have demonstrated in the past that we will protect ourselves from regulators who exercise their power in ways that harm rather than benefit the market. We are confident that we will comply with known rules and regulations in a disciplined manner."

Reference: SEC
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