- SEC sued crypto trading company Cumberland DRW for allegedly acting as an unregistered broker.
- Solana was among five cryptocurrencies the SEC alleged to be securities sold via the platform.
- With the SEC still identifying SOL as a security, the chances of approving a Solana ETF may be low.
The Securities & Exchange Commission (SEC) filed a lawsuit on Thursday against Chicago-based trading firm Cumberland DRW for operating as an unregistered securities dealer. The regulator mentioned several cryptocurrencies in the suit including Solana (SOL), for which investment firms have submitted ETF filings.
SEC sues Cumberland DRW, Solana ETF approval could be delayed
In a US Court in the Northern District of Illinois, the SEC charged crypto trading firm Cumberland DRW for illegally engaging in the buying and selling of securities. According to the filing, the company allegedly dealt in more than $2 billion worth of cryptocurrencies.
SEC claims that Cumberland has been operating as an unregistered broker from 2018 through the present. The SEC further alleges that Cumberland engaged in trading cryptocurrencies as investment contracts on third-party exchanges as part of its regular business.
“The federal securities laws require all dealers in all securities to register with the Commission, and those who operate in the crypto asset markets are no exception,” said Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets and Cyber Unit (CACU).
The regulator seeks a disgorgement of all the gains gathered from the sales of these cryptocurrencies. They also require the court to prohibit the firm from violating securities laws and impose civil money penalties.
In response to the charges, Cumberland DRW stated that it has continuously complied with all the rules laid down by regulators.
As a result, the company stated that it would not make any changes to its business operations.
Cumberland also called the SEC's action an "Enforcement-first approach in stifling innovation." It also claims to have acquired a broker-dealer registration in 2019 in compliance with the SEC's directive.
The cryptocurrencies the SEC mentioned as securities in the suit include Polygon’s MATIC (now POL), ATOM, Algorand (ALGO), Filecoin (FIL) and Solana (SOL).
The SEC has continued to use languages that refer to Solana as a security amid growing interest in a Solana ETF among investors. Asset manager VanEck filed for a spot Solana ETF on June 27, followed by 21 Shares on June 28.
If approved, these will be the first US Solana ETFs to offer investors access to the cryptocurrency's spot price.
However, with SOL recently included in the filing against Cumberland, the chances of the SEC approving a spot Solana ETF may be slim.
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