SEC Strikes Again: Cumberland DRW Charged For Unregistered Crypto Operations
The US Securities and Exchange Commission (SEC) has stepped up its regulatory scrutiny of the crypto industry by charging Cumberland DRW LLC with operating as an unregistered dealer, underscoring the agencys relentless enforcement approach that has come under increasing criticism from stakeholders and advocates in the digital asset space.
Accused Of Trading $2B In Crypto As Unregistered Dealer
In a statement released on Thursday, the SEC revealed that Chicago-based Cumberland DRW is accused of trading over $2 billion in crypto assets offered and sold as alleged securities in violation of federal registration requirements designed to protect investors.
The SECs complaint alleges that Cumberland has been engaging in these activities since at least March 2018, acting as an unregistered dealer by buying and selling crypto assets for its own accounts as part of its regular business operations.
According to the firms website, it provided deep, reliable liquidity in crypto assets, as well as investing in technology, claiming to have decades of experience in the field.
Cumberland DRW has publicly positioned itself as one of the worlds leading liquidity providers in the digital asset market, operating around the clock and executing trades with counterparties via telephone and its online platform, Marea.
Cumberland also offered spot cryptocurrency liquidity, and operations for dozens of cryptocurrencies, including stablecoins, for institutional investors in the market. Other services offered by the company included options and futures trading, bilateral crypto options, and non-deliverable forwards.
SEC Seeks Penalties Against Cumberland DRW
The SEC further alleges that Cumberland has been trading crypto assets treated as investment contracts on third-party exchanges. Jorge G. Tenreiro, Acting Chief of the SECs Crypto Assets and Cyber Unit, stated:
The federal securities laws require all dealers in all securities to register with the Commission, and those who operate in the crypto asset markets are no exception.
The SECs Head Of the digital assets divison noted that despite industry claims equating crypto asset sales to commodity sales, the SECs complaint asserts that Cumberland, the issuers, and investors viewed the transactions as investments in securities. Tenreiro further alleged:
Cumberland profited from its dealer activity in these assets without providing investors and the market with the important protections afforded by registration.
The SECs complaint was filed in the US District Court for the Northern District of Illinois and charges Cumberland with violating Section 15(a) of the Securities Exchange Act of 1934. The agency is seeking permanent injunctive relief, recovery of ill-gotten gains, prejudgment interest, and civil penalties against the firm.
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Text source: NewsBTC
