The US Securities and Exchange Commission (SEC) recently charged Chicago-based crypto market maker Cumberland with operating without registration as a dealer in securities transactions exceeding $2 billion. The complaint alleges that Cumberland has been engaging in the purchase and sale of crypto assets, classified as securities, for its own accounts without registration since March 2018. The SEC claims that Cumberland conducts trades around the clock via phone or its Marea platform, and routinely trades crypto assets on external exchanges. The agency specifically mentioned assets like POL (formerly MATIC), SOL, FIL, ALGO, and ATOM as examples of investment contracts and securities that Cumberland facilitated trading for.
In response to the SEC’s charges, Cumberland criticized the agency’s enforcement-first approach, stating that it has been engaged in good-faith discussions with the SEC on the classification of certain crypto asset transactions as securities for five years. The company argued that it has provided extensive documentation and made its senior management and compliance personnel available for interviews, but this is the first time the SEC has outlined specific transactions at issue. Cumberland expressed its intention to continue its operations without alteration in response to the SEC’s action, emphasizing its commitment to innovation and growth in the crypto market.
This development highlights the ongoing regulatory challenges faced by companies operating in the cryptocurrency sector, particularly in the United States. The SEC’s enforcement action against Cumberland underscores the importance of regulatory compliance and registration for entities engaged in crypto asset trading and transactions. The classification of certain crypto assets as securities has been a point of contention between the industry and regulators, with companies like Cumberland pushing back against the SEC’s designation.
As the crypto market continues to evolve and attract increased scrutiny from regulators, companies must navigate a complex regulatory landscape to ensure compliance with laws and regulations. The SEC’s charges against Cumberland serve as a reminder of the risks and legal implications associated with conducting crypto asset transactions without proper registration and compliance measures in place. Companies operating in the crypto sector must prioritize regulatory compliance and engagement with regulatory authorities to avoid enforcement actions and legal challenges.
Cumberland’s response to the SEC’s charges underscores the company’s commitment to its operations and its belief in the value of innovation in the crypto market. Despite the regulatory challenges and enforcement actions, Cumberland remains steadfast in its approach and plans to continue its activities without alteration. The company’s stance reflects the broader industry sentiment towards regulatory oversight and the ongoing efforts to establish clear guidelines and frameworks for crypto asset transactions.
Overall, the SEC’s charges against Cumberland shed light on the complexities of navigating the regulatory environment in the cryptocurrency sector. As the industry continues to face regulatory scrutiny and enforcement actions, companies like Cumberland must remain vigilant in their compliance efforts and engagement with regulatory authorities. The outcome of this case could have broader implications for how crypto asset transactions are classified and regulated in the future, highlighting the need for continued dialogue and collaboration between industry stakeholders and regulators.
