Cumberland DRW says it has agreed with SEC staff that the regulator will dismiss the case

The dismissal needs to be approved by the Commissioners and is one of several to be dropped under new SEC acting Chair Mark Uyeda.

Crypto market maker Cumberland DRW has agreed with SEC staff that the regulator will dismiss the case that it brought last year, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The dismissal still needs to be approved by the Commissioners and is one of several that are being dropped by the regulator following the appointment of new acting Chair Mark Uyeda.

In October last year, the SEC sued Cumberland, alleging it was trading in crypto "securities" without a broker-dealer license, citing at least $2 billion in transactions. The cryptocurrencies that the regulator classified as securities at the time were Polygon, Solana, Cosmos Atom, Algorand and Filecoin.

At the time, Cumberland vowed to fight the lawsuit, noting that the SEC did not offer a path for it to become regulated, because regulated broker dealers could only trade in Bitcoin and Ether, even though those are both commodities rather than securities. “This naturally calls into question whether the guidance to come in and register was provided in good faith,” Cumberland wrote in a blog post.

While most of the SEC’s enforcement actions were against pure crypto firms, Cumberland DRW was perhaps the only lawsuit that spanned the traditional financial (TradFi) sector. The regulator was also investigating the stock trading platform Robinhood, although it had not yet taken legal action. Last week, the SEC dropped that probe.

The SEC has already formally dropped its case against Coinbase and agreed to dismiss cases against Consensys and Kraken. It also closed several other crypto probes which had not yet reached the litigation stage, including re NFT firm OpenSea, decentralized exchange Uniswap, Bored Ape NFT issuer Yuga Labs and Gemini.

A key one that is still pending relates to Ripple. There’s been speculation that the reason is there has already been a judgment which makes it more complicated.