Cryptocurrency trading company Cumberland announces halt in Filecoin trading, citing regulatory factors.

According to a report by The Block, cryptocurrency trading firm Cumberland announced that it will halt trading of the token FIL used on the decentralized storage platform Filecoin due to regulatory reasons.

What is Filecoin?

Filecoin aims to create a decentralized storage network and has introduced the token FIL incentive mechanism to motivate users and drive wider adoption. Users pay miners to store files or data on the network, and miners earn tokens as rewards by fulfilling storage requests from clients. The mining capacity of miners is directly proportional to their active storage capacity, which incentivizes miners to collect and lease out as much storage space as possible.

In addition to raising $200 million in its 2017 ICO, the foundation Protocol Labs, renowned venture capitalists such as DCG, a16z, and Sequoia Capital have also invested in Filecoin. After three years of fundraising, Filecoin finally launched its mainnet in October 2020 and is supported by multiple exchanges for trading.

SEC Considers FIL as a Security

Grayscale announced in mid-May that after submitting a registration statement to the SEC for its Filecoin Trust FIL, the SEC deemed Filecoin FIL, the underlying asset of Filecoin Trust, to meet the federal securities laws' definition of a security and requested Grayscale to immediately withdraw its registration statement.

Grayscale emphasized that FIL does not fall under the definition of a security as per the federal securities law and is in discussions with the SEC regarding the legal basis for Grayscale and the trust fund, but no conclusion has been reached yet.

Cumberland Halts FIL Trading

Cryptocurrency trading firm Cumberland will cease trading FIL with over-the-counter counterparties, effective June 1, attributing this action to precautionary measures taken based on the regulatory environment. FIL experienced a 2.71% decline in a single day. It is currently ranked #31 on CoinMarketCap with a market capitalization of approximately $2 billion.