- The SEC’s lawsuit against Cumberland DRW shows ongoing rules enforcement in the crypto industry, similar to past cases with Binance.
- Ripple’s CEO criticized the SEC’s tough actions, showing growing frustration among crypto companies about regulations.
- Despite the lawsuit, Cumberland plans to keep running its business as usual, highlighting the struggle between following rules and staying in business.
Cumberland DRW LLC was sued by the U.S. Securities and Exchange Commission for purporting to be an unlicensed securities dealer. This resembles others filed by the SEC against Binance and Coinbase because it specifically shows five tokens sold as securities, which include MATIC, SOL, ATOM, ALGO, and FIL. This is not the first case of its type but one in a row within the SEC’s ongoing efforts to impose securities treaties and laws upon crypto.
SEC’s Accusations Against Cumberland
Since 2018, Cumberland bought and sold crypto assets classified as securities. All this was done without enough registration under the Securities Exchange Act of 1934. Besides, Cumberland is accused of promoting itself as a major liquidity provider and operating continuously via its online platform and telephone.
Additionally, the firm traded these assets on third-party exchanges, which the SEC argues qualifies it as a securities dealer. This lack of registration has led to the agency seeking permanent relief and other penalties.
Broader Impact and Industry Pushback
However, this case adds to the growing friction between the SEC and major crypto players. Ripple, another firm currently battling the regulator, recently filed a cross-appeal in its legal dispute regarding XRP token classification.
In line with a general industry stance, Brad Garlinghouse, the CEO of Ripple, expressed disapproval of the SEC’s actions. The SEC has also been contested by Crypto.com, which claims that by designating certain coins as securities, the agency has overreached its authority.
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What’s Next for Cumberland?
Consequently, Cumberland’s response indicated no immediate changes to its operations. The firm plans to continue providing liquidity for the same set of assets. Moreover, the SEC remains steadfast in its stance, arguing that crypto assets, despite industry claims, meet the legal criteria for securities. This case, alongside ongoing disputes, highlights the regulatory tension defining the future of the crypto market.
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