After being sued by the U.S. SEC, digital asset market maker Cumberland responded in a statement: “Today, we have become the latest target of the U.S. SEC’s enforcement-first approach to stifling innovation and preventing legitimate companies from engaging in digital assets. This is despite bipartisan opposition to this approach at a recent House Financial Services Committee hearing. At the hearing, the SEC was called a rogue agency, accused of failing to cooperate with Congress and abusing its power.
In our case, the issue is that the SEC believes that some of our transactions involving certain crypto assets are securities transactions. We have been in good faith discussions with the SEC for five years on this point. We have shared dozens of written summaries and statements, produced thousands of pages of materials, and subjected our senior management and compliance staff to lengthy interviews. Today's charges are the first time the SEC has outlined the specific transactions at issue.
The SEC claimed that these transactions required us to register as a broker-dealer. Despite our strong objections, we took this step and acquired a registered broker-dealer in 2019. Only then—and despite Chairman Gensler’s call to “come register”—we were told that we could only trade BTC or ETH (both commodities, not regulated by the SEC) using our own broker-dealer. This naturally raises questions about whether the guidance to come register was provided in good faith.
We will not be making any changes to our business operations or the assets we provide liquidity for as a result of this SEC action. We are confident in our strong compliance framework and strict adherence to all known rules and regulations, even if they are always a moving target (ETH was claimed to be a security not long ago).
We have demonstrated before that companies are willing to protect themselves from regulators exercising their power in ways that harm rather than benefit the market. We did this when Chairman Gensler was Chairman of the CFTC, and the court case against DRW was based solely on a ‘flat earth’ type conviction. This time, the SEC’s approach appears to be a game of ‘Catch-22’, and the ability to ‘come in and register’ is a mirage.
We are ready to defend ourselves again.”
Earlier news, the US SEC sued Cumberland DRW, claiming that it operated as an unregistered securities dealer.
The indictment shows that since March 2018, Cumberland has been buying and selling crypto assets as securities for its own account as an unregistered trader. It currently operates a crypto asset securitization business of more than $2 billion, violating the registration requirements of the U.S. federal securities law designed to protect investors. #Binance
