The U.S. Securities and Exchange Commission (SEC) on Thursday accused the Chicago trading firm DRW’s cryptocurrency subsidiary Cumberland DRW of engaging in over $2 billion worth of securities issuance and sales of cryptocurrency assets as an unregistered dealer, in violation of federal securities laws.
The SEC stated in a press release that Cumberland publicly touts itself as one of the leading global providers of cryptocurrency liquidity and engages in round-the-clock trading with counterparties through phone or its online trading platform Marea.
The SEC also alleged that Cumberland “engages in trading activities of cryptocurrency assets on third-party cryptocurrency exchanges that are considered as the issuance and sale of investment contracts, which is part of its daily business”. The SEC’s Cyber Unit Chief Jorge G. Tenreiro stated, “Cumberland profited from its proprietary trading of these assets without providing the important protections afforded by registration to investors and the market.”
The SEC stated that it will seek a permanent injunction against Cumberland DRW, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. Additionally, the SEC identified 5 cryptocurrencies as securities in the complaint, namely POL (formerly MATIC), SOL, ATOM, ALGO, and FIL.
Cumberland’s Response
Cumberland responded to the SEC’s action on the social platform X, stating that it has become the “latest target of the SEC’s enforcement priorities”. The company stated that it has been in communication with the SEC for five years and has provided relevant information to the regulatory agency.
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