- The SEC has sued crypto trading firm Cumberland DRW.
- Cumberland said it would defend itself against the charges.
- SEC Chair and crypto foe Gary Gensler has become a flashpoint in the presidential election.
The Securities and Exchange Commission sued crypto company Cumberland DRW on Thursday, alleging the Chicago-based trading firm operated as an unregistered broker when it sold Solana and Polygon tokens, among others.
Since 2018, Cumberland has handled “more than $2 billion of crypto assets offered and sold as securities,” the SEC alleged.
The regulator wants Cumberland to disgorge “all illicit trading profits” and to pay a fine, among other demands.
Cumberland said it would defend itself against the charges.
“We are not making any changes to our business operations or the assets in which we provide liquidity,” it said in a statement shared on X. “We are confident in our strong compliance framework.”
SEC Chair Gary Gensler has become a flashpoint in the upcoming presidential election, in part over his agency’s aggressive stance toward crypto.
Over half of the crypto-related enforcement actions the SEC has taken since 2015 have come during Gensler’s three-year tenure, according to crypto venture capital firm Paradigm.
Targets have included startups as well as some of the world’s largest exchanges, such as Coinbase and Binance.
Gensler has long contended that most cryptocurrencies fall under 90-year-old securities laws regulating stocks and bonds. By failing to register the tokens as securities, many issuers are breaking the law, he has argued.
Crypto companies and entrepreneurs have launched a counteroffensive, preemptively suing the SEC in hopes a court will side with them and declare their activities as being lawful.
Republican presidential nominee Donald Trump has promised to fire Gensler if elected. His opponent, Democratic Vice President Kamala Harris, has reportedly told finance executives she would do the same.
SEC Commissioner Mark Uyeda — one of two Republicans on the five-member body — slammed Gensler’s tenure as a “disaster” on Fox Business Thursday.
In its statement, Cumberland said it had “engaged in five years of good-faith discussions with the SEC” regarding the status of crypto assets and suggested it was blindsided by the lawsuit.
“Despite frequent protestations by the industry that sales of crypto assets are all akin to sales of commodities, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offer and sale of the crypto assets at issue in this case as investments in securities,” Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets and Cyber Unit, said in a statement.
“Cumberland profited from its dealer activity in these assets without providing investors and the market with the important protections afforded by registration.”
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.
