The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Cumberland DRW on Oct. 10, accusing the Chicago-based firm of operating as an unregistered dealer in crypto assets.
According to the SEC, Cumberland has allegedly sold more than $2 billion in crypto assets since 2018 without following federal registration requirements. The SEC’s complaint claims that Cumberland acted as a dealer by buying and selling crypto assets offered as securities for its own accounts starting from March 2018.
The firm, which operates 24/7 through its trading platform Marea, promotes itself as one of the leading liquidity providers in the crypto market. However, the SEC alleges that it failed to register its operations as required by law.
SEC claims crypto assets were treated as securities
As per the SEC, Cumberland traded assets treated as securities by both issuers and investors. Acting Chief of the SEC’s Crypto Assets and Cyber Unit, Jorge G. Tenreiro, said:
The law mandates that all securities dealers, including those in the crypto space, must register with the SEC. Cumberland’s operations bypassed these protections, allowing it to profit from unregistered activities at the expense of transparency.
SEC files the complaint in the U.S. District Court for the Northern District of Illinois. It accuses Cumberland of violating Section 15(a) of the Securities Exchange Act of 1934. The commission seeks permanent injunctive relief, disgorgement of any profits obtained from the violations, prejudgment interest, and civil penalties.
The SEC’s investigation was conducted by its Market Abuse Unit and CACU. Andrew McFall and Kathleen Hitchins led the investigation, while Amy Flaherty Hartman, Paul Kim, and Tenreiro supervised the case. Christopher Martin and Timothy Stockwell will lead the litigation under the supervision of Jack Kaufman and Tenreiro.
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