According to the SEC, Cumberland traded cryptocurrency assets such as POL, SOL, FIL, ALGO, and ATOM, which are regarded as securities by the agency because they are investment contracts.
Chicago-based cryptocurrency market maker Cumberland was charged by the US SEC on Thursday for operating without a dealer registration in securities transactions worth more than $2 billion.
According to its complaint, Cumberland has been regularly conducting business by buying and selling cryptocurrency assets—which are categorized as securities—for its own accounts without registering them since March 2018.
Additionally, the complaint claims that Cumberland uses its Marea platform or the phone to conduct trades continuously. Furthermore, according to the SEC, Cumberland regularly trades cryptocurrency assets on third-party exchanges that are regarded as investment contracts.
More specifically, the complaint alleges that Cumberland facilitated the trading of numerous crypto assets that are considered investment contracts, and thus securities. Further, the agency mentioned assets like POL (formerly MATIC), SOL, FIL, ALGO and ATOM.
Cumberland Challenges SEC’s Securities Designation in Crypto Transactions
Cumberland responded to the SEC’s charges by criticizing the agency’s enforcement-first approach, arguing it had become the latest target in an effort to stifle innovation. The company specifically disputed the SEC’s classification that certain crypto asset transactions are securities.
“We have engaged in five years of good-faith discussions with the SEC on this point,” the firm said. “On our end, we’ve shared dozens of written summaries and statements, produced thousands of pages of material and made our senior management and compliance personnel available for many hours of interviews. Today’s complaint is the first time the SEC has outlined the specific transactions at issue.”
In addition, Cumberland said that in reaction to the SEC’s action, it would carry on with business as usual.