SEC Charges Cumberland DRW with Handling $2B of Crypto as Unregistered Dealer

The case is the latest in a series of actions targeting prominent crypto companies such as Kraken, Binance, and Ripple Labs, signaling the SEC's continued focus

The Securities and Exchange Commission (SEC) has filed a lawsuit against Cumberland DRW, alleging that the major crypto liquidity provider operated as an unregistered dealer, handling over $2 billion in digital assets.

According to the complaint, Cumberland traded crypto assets that were offered as investment contracts on third-party exchanges, including tokens that the SEC had previously identified as securities, such as Solana and Polygon. The SEC further alleges that Cumberland failed to register these trades with the agency or provide customers with the required disclosures.

In response to the SEC's charges, Cumberland has denied any wrongdoing and asserted that it has been engaged in good-faith discussions with the SEC since 2019. The firm claims to have initially registered as a dealer-broker for Bitcoin and Ether but alleges that it had no guidance from the SEC regarding the other tokens involved until now.

Cumberland is notably pushing back against the SEC's authority, stating that it will not alter its business operations and is prepared to defend itself in court. This move could have broader implications for the crypto industry, potentially affecting other firms and traders operating without SEC registration.

This case also marks the latest in a series of actions by the SEC targeting prominent crypto companies. The agency has been ramping up its efforts to regulate the digital asset space, which has seen a surge in activity and attention in recent years. However, Cumberland, though a major player in the cryptocurrency industry, is less well-known to the public.

Cumberland DRW, a subsidiary of DRW Trading Group, is one of the largest liquidity providers and market makers in the digital asset sector. Founded in 2014, the firm facilitates cryptocurrency trades, including Bitcoin, Ether, Solana, and Polygon, on major exchanges. As a market maker, Cumberland helps stabilize token prices and supports the efficient execution of large trades by institutional investors.

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