SEC files lawsuit against Cumberland DRW for unregistered securities trading, targeting crypto assets like MATIC, SOL, and FIL.
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Cumberland DRW LLC, a prominent crypto trading company. The SEC accuses Cumberland DRW of operating as an unregistered securities dealer. It is similar to previous lawsuits filed against Binance and Coinbase.
As part of the lawsuit, the SEC has also listed a “non-exhaustive list” of cryptocurrencies that it believes may be classified as securities. Some of the tokens that are named include MATIC (POL), SOL, ATOM, ALGO, and FIL. The SEC’s action builds on its continuing campaign to control the crypto market and decide which digital assets are securities.
Cumberland DRW Responds to SEC Lawsuit Over Crypto Trading Practices
On the other hand, Cumberland DRW has filed its response to the lawsuit. It noted that the firm has communicated with the SEC over the last five years. The company has submitted thousands of pages of written summaries, and statements to the SEC to explain its stance. Cumberland DRW bought a registered broker-dealer in 2019 to avoid such issues, expecting smooth sailing in the regulatory department.
However, the SEC told the company that it could only use the broker-dealer to trade BTC and ETH, as they are categorized as ‘commodities’ and are not directly regulated by the SEC. On this basis, Cumberland DRW has said that it will not alter its business model or the assets for which it supplies liquidity. The company has, however, stuck to its stand, saying that it does business legally.
The case belongs to the series of actions taken by the SEC against companies related to cryptocurrencies. It is expected to provide better definition and order to an area of business that has long been blurred. It also has implications for the future of certain digital assets and the question of whether they are securities or not.
Ultimately, it will become increasingly significant as the case unfolds to how trading firms in the crypto space operate and which tokens are classified as securities. The case is a clear example that the regulations of cryptocurrencies remain ambiguous to date. As a result, this case may determine how other cryptocurrencies will be operated in the United States in the future. The judgement could provide a crucial indication of how the SEC will be approaching digital assets in the future years.
