The U.S. Securities and Exchange Commission (SEC) on Thursday accused Chicago trading firm DRW’s cryptocurrency subsidiary Cumberland DRW of engaging in over $2 billion worth of cryptocurrency trading as a securities dealer without being registered, in violation of federal securities laws.
The SEC stated in a press release that Cumberland publicly identified itself as one of the world’s leading providers of cryptocurrency liquidity and conducted round-the-clock trading with counterparties through phone or its online trading platform Marea.
The SEC also alleged that Cumberland “engaged in transactions of cryptocurrencies considered to be the issuance and sale of investment contracts on third-party cryptocurrency exchanges, as part of its ordinary business.” Jorge G. Tenreiro, the head of the SEC’s Cyber Unit, stated, “Cumberland profited from its proprietary trading of these assets without providing the important protections that registration affords to investors and markets.”
The SEC stated that it seeks to impose a permanent injunction on Cumberland DRW, require disgorgement of ill-gotten gains, payment of prejudgment interest, and civil penalties. Additionally, the SEC has designated five cryptocurrencies as securities in the complaint, namely POL (formerly MATIC), SOL, ATOM, ALGO, and FIL.
Cumberland’s Response
Cumberland responded to the SEC’s action on the social platform X, stating that it has become the “latest target of SEC enforcement priorities.” The company claimed to have been in communication with the SEC for five years and has provided relevant information to the regulatory agency.
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