Months after alleging that Cumberland DRW operated an unregistered securities trading operation, the U.S. Securities and Exchange Commission (SEC) has decided to drop its case against the Chicago-based crypto firm.
Case Dismissal and Regulatory Outlook
On March 4, Cumberland DRW announced via an X post that it had signed a joint filing with the SEC to dismiss the lawsuit, following an agreement reached on Feb. 20. While the dismissal still requires formal approval from the agency, Cumberland remains confident that the matter is now behind them.
The firm expressed optimism about the decision, describing it as a move toward improved cooperation between regulators and the crypto industry. It also reaffirmed its commitment to continuing discussions with the SEC to ensure a regulatory framework where innovation and compliance can coexist.
Background on the SEC Lawsuit
The SEC’s case against Cumberland revolved around accusations that the firm was operating as an unregistered securities dealer. According to the regulator, Cumberland facilitated over $2 billion in crypto asset trades without the necessary registration.
The commission’s lawsuit, filed on Oct. 10, 2023, alleged that Cumberland conducted these trades through its proprietary trading platform, Marea, as well as through over-the-counter (OTC) deals via phone. The SEC cited five specific cryptocurrencies—Polygon (MATIC), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL)—as securities under federal law.
As part of its case, the SEC sought permanent injunctive relief, disgorgement of profits, prejudgment interest, and civil penalties.
Cumberland, however, maintained that it had operated in good faith, highlighting its dealer-broker registration since 2019 and emphasizing that it had spent five years engaging in discussions with the SEC regarding regulatory compliance.
SEC’s Changing Approach Toward Crypto Regulation
The dismissal of Cumberland’s case is part of a broader trend in which the SEC has backed away from several high-profile crypto lawsuits. In recent weeks, the commission has dropped cases against major exchanges such as Coinbase and Kraken, as well as ended investigations into NFT-focused companies Yuga Labs and OpenSea. Additionally, probes into Uniswap Labs and Gemini were also recently concluded without further action.
This shift in regulatory approach aligns with the SEC’s recent efforts to engage with the crypto industry more constructively. Commissioner Hester Peirce has led the formation of a Crypto Task Force, which aims to clarify the classification of digital assets under U.S. securities laws. The task force has planned a series of roundtable discussions, with the first session set for March 21 at the SEC headquarters in Washington, D.C.
Looking Ahead
With the SEC appearing to adopt a more measured stance toward crypto regulation, industry players are hopeful that future engagements will lead to clearer and more transparent regulatory guidelines. Cumberland DRW’s case dismissal marks a potential shift in how the SEC approaches enforcement actions, potentially paving the way for a more balanced relationship between regulators and the crypto sector.
