The United States Securities and Exchange Commission has accused crypto market maker Cumberland DRW of acting as an unregistered broker-dealer.
The agency, which revealed the charges on Thursday, alleged that the Chicago-based company “operated as an unregistered dealer for more than $2 billion in crypto assets offered and sold as securities.”
“Despite frequent industry protests that crypto asset sales all amount to commodity sales, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offering and sale of the crypto assets at issue in this case as investments in securities, and Cumberland profited from its broker-dealer activity in these assets without providing investors and the market with the important protections afforded by registration,” said Jorge G. Tenreiro, Chief acting of the agency’s Crypto Assets and Cybersecurity Unit, in a statement.
In the complaint, the SEC alleged that the company “made available for trading numerous crypto assets offered or sold as investment contracts and, therefore, securities.” The agency cited POL (formerly MATIC), SOL, FIL, ALGO and ATOM.
Learn more: SEC’s Mango settlement reiterates its argument that SOL is a security
Such inclusions are likely to spark further criticism of the agency, given the SEC’s recent retreat from the use of the term “crypto asset securities” in some of its highest-profile court cases. Critics of the SEC have accused the agency of specifically targeting the crypto sector.
Cumberland echoed those complaints in a statement released Thursday, in which the market maker vowed to defend itself. The company said it had become “the latest target in the SEC’s approach to stifle innovation and prevent legitimate companies from engaging in digital assets.”
“We are not making any changes to our business operations or the assets in which we provide liquidity as a result of this SEC action,” Cumberland said. “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, ETH was considered a security) .”
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