- SEC has sued market maker Cumberland over offering and sale of unregistered securities.
- The regulator says Cumberland violated the US securities laws by operating as an unregistered dealer.
The US Securities and Exchange Commission has sued Cumberland DRW LLC, a Chicago-based crypto market maker, for acting as an unregistered securities dealer.
SEC said in a press release on Oct. 10 that Cumberland had violated the securities laws by buying and selling of over $2 billion worth of crypto assets since March 2018. In terms of crypto regulation, the SEC says the assets in question were “offered and sold as securities.”
Investment securities
According to the press release, Cumberland provided these crypto assets via its own accounts, the SEC added, which meant the company operated as an unregistered dealer.
The agency’s charge against the market maker also notes Cumberland’s description of itself as a “leading liquidity provider”, and traded with counterparties via telephone or its online platform Marea.
“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,” Jorge G. Tenreiro, acting chief of the SEC’s crypto assets and cyber unit, said in a statement.
Tenreiro added that Cumberland profited from these activities but did not provide investors and the broader market the crucial protections that registration with the regulator offers.
SEC seeks permanent injuction against Cumberland
In a complaint filed at the US District Court for the Northern District of Illinois, SEC alleges violation of Section 15(a) of the Securities Exchange Act of 1934.
In its argument, it wants a permanent injunction against Cumberland. The crypto platform should also forfeit all ill-gotten gains, and be slapped with a civil penalty.
SEC’s lawsuit against Cumberland come a day after US prosecutors charged 14 people and four crypto companies over market manipulation and fraud. Oct. 10 also saw Ripple file a cross-appeal following the regulators decision to appeal its case against Ripple.
Earlier this week, Crypto.com sued the SEC after the regulator issued a Wells Notice to the crypto exchange.
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