A judge for the U.S. District Court for the Northern District of Illinois dismissed a Securities and Exchange Commission (SEC) case against a unit of University Trustee Don Wilson’s (A.B. ’88) Chicago-based crypto trading firm Cumberland DRW on March 31. The SEC and Cumberland DRW jointly sought the dismissal.
In a March 27 press release, the SEC said its decision to drop the case “rests on its judgment that the dismissal will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry, not on any assessment of the merits of the claims alleged in the action.”
The Biden administration greatly expanded cryptocurrency regulation under the leadership of then SEC Chair Gary Gensler, especially after the collapse of digital currency exchange platform FTX in 2022. Shortly after returning to the White House, the Trump administration began scaling back enforcement efforts against cryptocurrency firms, leading to the abandonment of a series of lawsuits from the last few years against firms such as Coinbase.
According to Crain’s Chicago Business, the SEC’s case against Cumberland DRW was a “holdover from the tail end of the Biden administration’s SEC,” and many similar lawsuits had already been dropped.
In a press release on October 10, 2024, the SEC announced that it had charged Cumberland DRW with violating federal registration laws for selling more than $2 billion of cryptocurrency assets as securities. The statement alleged that the unregistered dealings had been going on since at least March 2018.
Cumberland DRW claimed in a separate October 10 statement posted on X that the SEC had made several errors in both the communication and enforcement of Biden-era registration law changes. “Today’s complaint is the first time the SEC has outlined the specific transactions at issue,” the statement read. “The SEC asserts these transactions required us to register as a broker-dealer. While we strongly disagree, we took that step and acquired a registered broker-dealer in 2019. Only then… were we told we could only use our broker-dealer to trade [Bitcoin] or [Etherium] (both commodities and not under the jurisdiction of the SEC).”
In an interview two weeks later with CoinDesk, a cryptocurrency-focused news website, Wilson claimed that the SEC’s guidelines for cryptocurrency firm registration are unclear by design: “This dynamic put the SEC in a position where they could say everyone is breaking the rule, and we’re just going to go after whoever we want to.”
President Donald Trump ran on a platform of being friendlier to the cryptocurrency industry than the Biden administration. In March, Trump signed an executive order to establish both a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile to capitalize on Bitcoin and other digital assets owned by or forfeited to the Department of the Treasury.
“The Executive Order begins to resolve the current disjointed handling of cryptocurrencies seized through forfeiture by, and scattered across, various Federal agencies,” the fact sheet on the order read.
“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 DRW wrote in a statement on X announcing the joint filing to dismiss the case.
Aaryan Kumar contributed reporting.
