The US Securities and Exchange Commission (SEC) on Thursday accused DRW’s cryptocurrency subsidiary, Cumberland DRW, of engaging in over $2 billion worth of cryptocurrency trading as a securities issuer and seller without registering as a dealer, in violation of federal securities laws.
The SEC stated in a press release that Cumberland publicly identifies itself as one of the leading providers of cryptocurrency liquidity globally and engages in round-the-clock trading with counterparties through phone calls or its online trading platform, Marea.
The SEC also alleged that Cumberland “engages in trading activities of cryptocurrencies on third-party cryptocurrency exchanges that are considered to be the issuance and sale of investment contracts, which is part of its daily business.” Jorge G. Tenreiro, Associate Regional Director of the SEC’s Division of Enforcement, stated, “Cumberland profited from its proprietary trading of these assets without providing the significant investor and market protections afforded by registration.”
The SEC stated that it will seek permanent injunctions against Cumberland DRW, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. Additionally, the SEC classified five cryptocurrencies—POL (formerly MATIC), SOL, ATOM, ALGO, and FIL—as securities in the complaint.
Cumberland’s Response
Cumberland responded to the SEC’s action on social platform X, stating that it has become the “latest target of the SEC’s enforcement-first approach.” The company claimed to have been in communication with the SEC for five years and provided relevant information to the regulatory agency.
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