The Securities and Exchange Commission (SEC) charges Cumberland DRW as an unregistered securities dealer. Cumberland fervently denies these accusations.

The core of the SEC’s suit is whether most crypto transactions are bound by securities law, a critical issue for the future of industry regulation.

Cumberland: Unregistered Securities Dealer?

Cumberland, a DRW-based crypto market maker, faces SEC charges for operating as an unregistered dealer in the crypto space. The SEC charged Cumberland with performing these services since March 2018 and selling more than $2 billion in unregistered transactions. In response, the firm published a furious statement:

“Today we became the latest target of the SEC’s enforcement-first approach to stifling innovation and preventing legitimate companies from engaging in digital assets. We are not making any changes to our business operations…as a result of this action by the SEC,” it read.

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Cumberland was wholly combative in its tone. It mentioned a recent House Financial Services Committee meeting in which the SEC was called a “rogue agency,” suggesting the SEC overstepped its authority. Additionally, it described a history of Cumberland’s efforts to meet compliance and even previous spats with SEC Chair Gary Gensler.

Cumberland’s righteous indignation looks justified, given the circumstances. The firm has had a long history in the space, and claimed it registered as a broker-dealer in 2019. However, Cumberland alleges that the SEC claimed it could only legally trade Bitcoin or Ethereum, which are under the CFTC’s looser jurisdiction.

In other words, Cumberland called the SEC’s pleas to register a “Catch-22” and a “mirage.” It shared data and access with the SEC over the years, but the agency suddenly accused them of a six-year spree of finance crimes. This mirrors a similar situation two days ago when the SEC sent a Wells Notice to Crypto.com.

Read More: What Does It Mean To Receive a Wells Notice From the SEC?

Crypto.com was also combative in responding to the SEC, preemptively suing the agency before it could file charges. It accused the SEC of “regulation by enforcement,” and claimed that the SEC acted from desperation against a growing bipartisan pro-crypto consensus. Gensler seems to believe that most crypto asset transactions are securities, and that’s simply unworkable.

The text of the SEC’s charges against Cumberland makes little mention of specific unregistered securities transactions and leans on the idea that the industry is wrong to describe the majority of crypto assets as commodities. Crypto.com described this legal precedent as a battle for crypto’s future.