SEC Drops Lawsuit Against Cumberland DRW Over Unregistered Securities Trading

• The SEC is dropping its case against Cumberland DRW after a joint filing on March 4.
• The lawsuit alleged that Cumberland operated as an unregistered securities dealer, handling $2B in crypto.

The U.S. Securities and Exchange Commission (SEC) has agreed to dismiss its lawsuit against Chicago-based crypto trading firm Cumberland DRW. The firm announced the decision in a March 4 post on X, stating that both parties had signed a joint filing to dismiss the case.

The SEC initially sued Cumberland DRW in October 2023, alleging that the firm operated as an unregistered securities dealer. The agency claimed Cumberland facilitated more than $2 billion in crypto transactions involving tokens it considered securities. The regulator specifically named Polygon (POL), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL) in its allegations.

Cumberland argued that it had registered as a dealer-broker in 2019. The firm also claimed it engaged in five years of discussions with the SEC before facing legal action. Cumberland described the lawsuit as part of the SEC’s broader enforcement-first strategy against the crypto industry.

SEC’s Ongoing Shift in Crypto Regulation

The SEC sought permanent injunctive relief, disgorgement of profits, prejudgment interest, and civil penalties. However, on Feb. 20, Cumberland and SEC staff reached an agreement in principle to dismiss the case. The final approval from the agency is still pending.

The lawsuit against Cumberland is the latest SEC case involving crypto firms to be dropped. In recent months, the regulator has dismissed lawsuits against major exchanges like Coinbase and Kraken. It has also closed investigations into Uniswap Labs, Gemini, Yuga Labs, and OpenSea.

Meanwhile, the SEC has formed a Crypto Task Force led by Commissioner Hester Peirce. The task force aims to provide clarity on whether digital assets should be classified as securities. The first roundtable discussion is scheduled for March 21 at the SEC’s Washington, D.C., headquarters.

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