SEC's Allegations Against Cumberland

The United States Securities and Exchange Commission (SEC) has taken legal action against Cumberland, a prominent crypto market maker based in Chicago.

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The SEC alleges that Cumberland has operated without proper registration in securities transactions exceeding $2 billion. According to the complaint, since March 2018, Cumberland has purchased and sold crypto assets, which the SEC classifies as securities, without the necessary registration.

Cumberland's Business Operations

Cumberland conducts its trading activities around the clock, both via phone and through its proprietary platform known as Marea.

The SEC's complaint states that Cumberland routinely trades crypto assets categorized as investment contracts on various external exchanges. These activities have raised concerns at the SEC, leading to the current charges against the company.

Allegations of Trading Investment Contracts

More specifically, the SEC's complaint highlights that Cumberland allegedly facilitated trading several crypto assets considered investment contracts and, therefore, securities.

The complaint mentions POL (formerly MATIC), SOL, FIL, ALGO, and ATOM as assets. These allegations are at the heart of the SEC's case against Cumberland as the agency seeks to enforce securities regulations in the rapidly evolving crypto landscape.

"Today's complaint is the first time the SEC has outlined the specific transactions at issue," Cumberland responded.

Cumberland's Response to the Charges

In response to the SEC's charges, Cumberland has criticized the agency's enforcement-first approach, arguing that it has become the latest target to stifle innovation in the crypto space.

The company disputes the SEC's classification that certain crypto asset transactions constitute securities. Cumberland emphasized that it has engaged in five years of good-faith discussions with the SEC, providing extensive documentation and participating in numerous interviews.

Future Implications for Cumberland

Despite the charges, Cumberland has declared its intent to continue operations without alteration. The company remains steadfast in its position, maintaining that it has operated within the bounds of the law.

The outcome of this legal battle could have significant implications for the classification and regulation of crypto assets as securities, potentially impacting the broader crypto industry.