- The Blockchain Association has called for an investigation into crypto platform Prometheum
- Prometheum was awarded an SPBD just weeks before its CEO talked up the SEC in front of the US government
- The association is worried that a “sweetheart” deal has been struck
The Blockchain Association has written to the Securities and Exchange Commission (SEC) to demand an investigation into the awarding of a broker-dealer license to Prometheum. The platform made headlines in May when its CEO Aaron Kaplan made an appearance at a United States House Financial Services Committee defending the SEC’s approach to crypto regulation, with many suspicious of his stance and just how his platform attained its Special Purpose Broker-Dealer (SPBD) license. The Blockchain Association queried how Prometheum was able to obtain a license when it doesn’t have a working product, among other concerns.
Prometheum’s Four-year Journey
Prometheum’s efforts to gain the correct level of licensing date back to 2018 when it applied for Regulation A security token trading clearance, and in May it was finally awarded an SPBD license after more than four years. No one paid any attention at the time, even when Kaye talked up the intentions of SEC Chair Gary Gensler:
We are transitioning from the current crypto ‘Wild West’ ecosystems to a crypto financial services ecosystem that is licensed under securities laws. I take the same position as Gary Gensler, SEC chairman, that federal securities laws are in general the best framework to regulate digital assets.
Kaplan made much more of a splash when he appeared at the House Financial Services Committee where he repeated the message where he was presented as the poster child for the “compliant path for crypto”. His appearance, his tone and the fact that Prometheum had quietly managed to go where no others have yet been able to tread led to him and his company being subjected to social media interrogation, with links to China exposed in the process.
Blockchain Association Smells a Rat
The fact that Kaplan was able to get a seat in front of the committee just weeks after Prometheum was awarded the license, where he extolled the virtues of the atrocious double-standard system in operation at the SEC, has led to the Blockchain Association seeking answers. It wrote to the SEC yesterday urging it to “open an investigation into potential impropriety by the Securities and Exchange Commission … and its approval of Prometheum Ember Capital … as a first-of-its-kind Special Purpose Broker-Dealer” as well as investigating how Kaplan secured his seat.
1/ Today, the @BlockchainAssn submitted a letter to the SEC’s Inspector General calling for an investigation into the circumstances surrounding Prometheum.
Although there may not be anything nefarious, suspicious circumstances beg someone to look under the hood…
Key Qs 🧵👇 pic.twitter.com/Gp7bx7WD5X
— Marisa Tashman Coppel (@MTCoppel) July 12, 2023
The association points out that Prometheum was able to secure its license despite having “no working product,” listing no assets, and having no clear plans as to which ones it will list in the future. It also argued that Prometheum’s mode of operation fails to comply with the same SEC rules that Binance and Coinbase have been accused of infracting.
It also pointed out that Prometheum has mysteriously changed its tone over digital asset law, having gone from publicly questioning the SEC’s stance in April 2021 to promoting “the same false narrative propounded by Chair Gensler.” The association is worried that Kaplan has struck a “sweetheart deal” with the SEC where he got his license in return for talking up the SEC’s plans:
We are concerned that the Commission granted Prometheum a “sweetheart” deal in exchange for support of the Commission’s policy goals, or that Prometheum is leveraging personal connections with the Commission to gain an unfair advantage in the market.
SEC Investigating Itself? Hmmm.
The Blockchain Association signed off by issuing its gravest concern, that Gensler is “using Prometheum and the SPBD licensure process as a means to thwart congressional efforts toward legislation by continuing to spread the false narrative that the law is already clear with regard to digital asset securities.”
Of particular concern, it said, is the thought that pressure could have been applied from the SEC on FINRA (the awarding body) regarding the approval of Prometheum’s SPBD license.
Of course, asking the SEC to investigate itself will only result in one conclusion, but, as the Blockchain Association noted, there is definitely something fishy about Kaplan’s change of heart and the fact he was able to gain a seat at the hearing in order to extol the virtues of Gary Gensler’s barmy army.
