The U.S. Securities and Exchange Commission (SEC) is suing Chicago-based crypto trading firm Cumberland for allegedly operating as an unregistered securities dealer in transactions involving more than $2 billion worth of crypto assets.
The complaint alleges that since March 2018, Cumberland has been buying and selling crypto assets offered and sold as securities as part of its regular business operations, in violation of the registration requirements of federal securities laws.
The SEC say Cumberland, which publicly claims to be one of the world’s leading liquidity providers in crypto, trades digital assets with counterparties by phone or through its online trading platform Marea. According to the regulator, the company would also engage in trading crypto securities on third-party exchanges.
Says Jorge G. Tenreiro, Acting Head of the SEC’s Crypto Assets and Cyber Unit (CACU):
“Despite frequent industry protests that the sale of crypto assets is all akin to the sale of commodities, our complaint alleges that Cumberland, the respective issuers and objective investors treated the offer and sale of the crypto assets in this case as investments in securities, and Cumberland profited from its dealer activities in these assets without providing investors and the market the important protection afforded by registration.
Cumberland said in a statement say it has become the latest target of SEC’s “enforcement-first” approach, but says it is prepared to defend itself against the allegations.
“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 are confident in our strong compliance framework and disciplined adherence to all known rules and regulations – even though they have been a moving target (not long ago it was claimed that ETH was a security).”
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