Cumberland DRW filed to operate as an unregulated crypto dealer and the US Securities and Exchange Commission (SEC) filed a lawsuit against the firm on Oct. 10.
In what the Securities and Exchange Commission claims is a violation of federal registration rules, Cumberland ‘has engaged in more than $2 billion worth of unregistered cryptocurrency transactions since 2018.’ According to the SEC’s complaint, Joseph K. Cumberland improperly engaged in proprietary trading, as well as trading on third-party crypto exchanges, without registering.
Cumberland acted as a securities dealer but failed to register as a securities dealer with the Commission, in violation Section 15(a) of the Securities Exchange Act of 1934 (the ‘Exchange Act’).
Crypto Faces SEC Penalties
The agency is seeking permanent injunctive relief, disgorgement of profits, prejudgment interest and civil penalties. Cumberland traded five tokens, according to the SEC, including Polygon, Solana, Cosmos, Algorand and Filecoin, are themselves securities that the SEC has previously declared are securities.
We have engaged in five years of good-faith discussions with the SEC on this point […] Today’s complaint is the first time the SEC has outlined the specific transactions at issue.
Cumberland also said on social media platform X that it registered itself as a broker dealer in 2019, but then found out the registration only had application to Bitcoin and Ether. The company said the SEC had turned it into “the latest target” in its focused assault on digital assets.
“We are not making any changes to our business operations or the assets in which we provide liquidity as a result of this action by the SEC […] We’re ready to defend ourselves again.”
Cumberland, however, is not alone among the defiant. After the SEC sent Crypto.com a Wells notice, on Oct. 8, Crypto.com filed its own suit against the agency. Crypto.com is asking a Texas court to rule that it isn’t a securities broker dealer and isn’t a registered entity as required under the Exchange Act.
