SEC Sues Crypto Market Maker Cumberland DRW

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Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

The U.S. Securities and Exchange Commission said Cumberland DRW was an unregistered securities dealer in a lawsuit Thursday, alleging the crypto market maker"bought and sold" cryptocurrencies that were sold as unregistered securities.

"Public statements by the issuers and promoters of the Cumberland-Traded Assets – including statements retransmitted by Cumberland and by the third-party crypto asset trading platforms that Cumberland uses – would have led objective investors to reasonably view the offer to purchase or sell of each of the Cumberland-Traded Assets as offers to purchase and sell investment contracts, which are securities pursuant to the federal securities laws," the SEC's complaint said.

As one example, the SEC alleged, Cumberland promoted ATOM through,"An email sent to counterparties on February 20, 2023 stated: 'At the moment, one of the smaller gainers in the sector, outside of ETH and EOS, has been ATOM. ATOM is up ‘only’ 53% YTD, despite strong fundamentals and a healthy developer community; it’s a name where we expect to see a catchup rally if crypto remain buoyant.

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