Michaela
The U.S. Securities and Exchange Commission (SEC) has reached a preliminary agreement to drop its case against Cumberland DRW, the crypto trading arm of Chicago-based DRW. The decision is now pending final approval from the agency.
On March 4, Cumberland announced in an X post that it had signed a joint filing with the SEC, reaching a preliminary agreement to dismiss the case. “As a firm deeply committed to the principles of integrity and transparency, we look forward to continuing our dialogue with the SEC to help shape a future where technological advancements and regulatory clarity go hand in hand, ensuring that the U.S. remains at the forefront of global financial innovation,” Cumberland wrote.
The SEC filed a lawsuit against Cumberland DRW in October 2024, accusing the crypto trading division of operating as an unregistered securities dealer while handling over $2 billion in digital assets.
The agency alleged that since March 2018, Cumberland had been buying and selling cryptocurrencies classified as securities without proper registration. The SEC specifically named Polygon (MATIC), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL) as assets involved in the case.
The agency sought permanent injunctive relief, disgorgement of profits, prejudgment interest, and civil penalties.
In response, Cumberland contended that it had registered as a dealer-broker in 2019 and had engaged in years of discussions with the SEC before being targeted with legal action. The firm criticized the lawsuit, calling it an example of the SEC’s enforcement-driven approach to regulating the crypto industry.
Ripple Lawsuit Stalls as SEC Drops Cumberland Case
The SEC’s decision to dismiss its case against Cumberland marks another withdrawn lawsuit in the crypto sector. The agency has previously dropped legal actions against major exchanges, including Coinbase and Kraken.
However, despite a round of dropped cases, it has yet to do so for its case against fintech company Ripple Labs Inc. As of January 31, 2025, there have been no new developments in the ongoing Ripple case.
The SEC’s decision not to dismiss the Ripple case stands out for several reasons. Notably, the arguments for appeal in Ripple’s case mirror those in Coinbase’s interlocutory appeal, which the agency has already dropped. This disparity raises questions about the SEC’s approach and the future of the Ripple lawsuit.
Additionally, Ripple CEO Brad Garlinghouse’s meeting with President Donald Trump prior to his inauguration indicated a positive relationship between the firm and the crypto-friendly administration.
Jeremy Hogan, a partner at Hogan & Hogan and a prominent legal figure in the cryptocurrency sector, provided insights into the ongoing Ripple case and the possible reasons it has yet to be dismissed.
In a thread on X, Jeremy Hogan suggested that the delay in resolving Ripple’s case may be attributed to the injunction included in Judge Analisa Torres’ ruling.
“Once a court issues an injunction, the parties themselves can’t simply agree between them to disregard the injunction,” Hogan wrote.
Under Federal Rule 60, a court ruling can only be changed if circumstances have significantly shifted. In Ripple’s case, the SEC might argue that its ongoing efforts to revise crypto regulations could make the injunction unnecessary.
However, the challenge lies in the fact that the court’s decision was based on the Howey test, a legal standard set by the U.S. Supreme Court, which SEC rule changes cannot override.
“Ripple only has one shot at getting the injunction dissolved with the trial court so it will have to draft a very carefully worded motion. That takes time and the SEC will basically have to sign off on it,” Hogan added.
Once both parties agree, they dismiss their appeals, allowing Ripple to file a motion with the trial court. The judge then reviews the motion, which could take time. Hogan predicted that a decision may come by May, though appeals could be dropped as early as April.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
