30s Summary
The US SEC has sued Cumberland DRW for allegedly operating unregistered, claiming it sold over $2bn in crypto since 2018 without federal registration. The SEC believes Cumberland, trading crypto on its own behalf and on exchanges, should register as a dealer. It seeks a court order to stop Cumberland, have them return any profits from unregistered activities and pay penalties. Cumberland argues it attempted to register as a dealer-broker in 2019. The case comes as the SEC aims to tighten its control over the crypto market, including firms like Crypto.com.
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The US Securities and Exchange Commission (SEC) has brought legal action against Cumberland DRW, accusing them of operating unregistered. The SEC claims Cumberland has sold over $2 billion in cryptocurrency since 2018, without the appropriate federal registration.
According to the SEC, Cumberland has been dealing in crypto – buying and selling on its own behalf and on crypto exchanges – without registering as a dealer. It’s now asking for a court order to put a stop to this, as well as making Cumberland return any profits from their unregistered activities and pay penalties.
One of the particularly interesting things the SEC is saying is that five of the types of cryptocurrency Cumberland deals in should actually be classed as securities. These include Polygon (MATIC), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL). So, the SEC says Cumberland should have been registered as a securities dealer – something they’ve never done.
Cumberland is fighting back, though. They say they did try to register as a dealer-broker back in 2019. But they subsequently found out that this registration was only applicable to Bitcoin (BTC) and Ether (ETH), not the other cryptocurrencies they deal in.
Cumberland says they’ve been in talks with the SEC for five years to try to sort this out but, to their surprise, the SEC has now gone ahead and taken legal action. The company has vowed to keep on with its business as usual while it defends itself against the SEC’s accusations.
This legal wrangle comes as part of a larger effort by the SEC to increase its oversight and control of the cryptocurrency market, including other companies like Crypto.com. It will certainly be a case to watch.
Source: Cointelegraph