The recent lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Chicago-based crypto trading firm Cumberland has sent shockwaves through the cryptocurrency industry. The SEC alleges that Cumberland has been operating as an unregistered securities dealer, engaging in transactions involving over $2 billion worth of crypto assets.
According to the complaint, Cumberland has been buying and selling crypto assets that are considered securities under federal securities laws since March 2018. This blatant violation of registration requirements has caught the attention of the SEC, leading to legal action against the firm.
Cumberland, a prominent liquidity provider in the crypto market, conducts its trades through phone calls, its online trading platform Marea, and third-party exchanges. The SEC’s Crypto Assets and Cyber Unit (CACU) has accused Cumberland of treating these crypto assets as investments in securities, thereby profiting from their dealer activities without adhering to the necessary regulations.
Jorge G. Tenreiro, the acting chief of the SEC’s CACU, emphasized the importance of providing investors and the market with the protections offered by registration. He stated, “Despite frequent protestations by the industry that sales of crypto assets are all akin to sales of commodities, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offer and sale of the crypto assets at issue in this case as investments in securities.”
In response to the lawsuit, Cumberland released a statement asserting its confidence in its compliance framework and adherence to regulations. The firm expressed readiness to defend itself against the SEC’s accusations, stating that it will not make any changes to its business operations or the assets it provides liquidity for.
As the crypto industry continues to evolve, regulatory scrutiny is becoming increasingly stringent. Cumberland’s case serves as a reminder of the importance of compliance and adherence to regulatory requirements in this fast-paced and ever-changing market.
To stay updated on the latest developments in the crypto space, subscribe to our email alerts and follow us on social media platforms like Twitter, Facebook, and Telegram. Stay informed and make informed decisions in this dynamic industry.