SEC charges Cumberland DRW with operating as unregistered crypto dealer

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The SEC filed charges against Chicago-based Cumberland DRW, alleging that the company operated as an unregistered dealer in cryptoassets that were offered and sold as securities.

The SEC alleges that Cumberland engaged in more than $2 billion in trades in violation of federal securities laws designed to protect investors.

According to the SEC complaint, Cumberland has been operating as an unregistered dealer since at least March 2018. The company allegedly bought and sold crypto assets, considered securities, as part of its regular business.

Acting Head of the SEC’s Crypto Assets and Cyber ​​Unit, Jorge G. Tenreiro, emphasized that all securities dealers, including those involved in crypto assets, must register with the Commission.

The SEC is seeking several remedies, including a permanent injunction to prevent further violations, disgorgement of profits, prejudgment interest and civil penalties.

The SEC v. Cumberland case is part of a larger regulatory effort to enforce compliance in the cryptocurrency industry. The SEC has been increasingly active in targeting unregistered activities related to crypto assets.

In June 2023, the SEC charged Coinbase with operating its trading platform as an unregistered domestic securities exchange, broker and clearing agency. The Commission also accused Coinbase of failing to register the offering and sale of its crypto-asset staking program.

In early January 2023, the SEC filed a lawsuit against Genesis Global Capital and Gemini Trust Company, alleging that their Gemini Earn crypto-lending program was an unregistered securities offering.

These actions reflect the SEC’s continued focus on regulating the crypto industry, ensuring that firms involved in digital asset transactions comply with federal securities laws.

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