The Securities and Exchange Commission (SEC) charged Chicago-based crypto market maker Cumberland DRW for allegedly operating as an unregistered securities dealer on Oct. 10.
According to the SEC’s complaint, Cumberland has traded over $2 billion in crypto classified as securities since at least March 2018.
The agency alleges that these activities, conducted through Cumberland’s trading platform Marea and over the phone, violated federal securities laws intended to protect investors.
Jorge G. Tenreiro, acting chief of the SEC’s 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.”
Tenreiro also addressed the crypto community’s claims that tokens should be treated as commodities, arguing that Cumberland’s actions treated the sale and offer of crypto as securities, necessitating registration to ensure investor protection.
Moreover, the complaint highlighted that the company’s self-described role as a leading liquidity provider in the crypto market adds weight to these claims.
As a result of the alleged violations, the SEC seeks permanent injunctive relief to halt these activities, the disgorgement of profits Cumberland allegedly gained unlawfully, plus prejudgment interest and civil penalties.
According to Cumberland’s website, the firm offers liquidity for over-the-counter (OTC) markets for different cryptocurrencies, including stablecoins, as well as crypto derivatives and bilateral trading of crypto forwards.
Cumberland responds
In a statement posted on X, Cumberland claimed that the SEC is trying to stifle innovation and prevent companies from engaging in crypto.
The market maker stated that it would not change its operations following the enforcement action by the US regulator. Cumberland added:
“We are confident in our strong compliance framework and disciplined adherence to all known rules and…
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