- Little-known crypto platform Prometheum took the limelight at a recent US House hearing
- Prometheum’s co-CEO Aaron Kaplan was supposed to advocate for the SEC’s approach, but his arguments were torn apart
- Prometheum has become an instant joke, with many noting how its plan, whatever it was, clearly backfired
Few in the crypto world had heard of the crypto platform Prometheum before Tuesday’s United States House Financial Services Committee hearing, but they sure have now. Prometheum co-founder and its co-CEO Aaron Kaplan were the major talking points from the hearing after Kaplan testified in support of the Securities and Exchange Commission’s (SEC) approach to crypto regulation, only for his rationale, and even his answers themselves, to be ripped apart by observers.
Prometheum Was Awarded SPBD License
In May, Prometheum was awarded a Special Purpose Broker-Dealer (SPBD) license in the US, the first of its kind for digital asset securities, following an avowed crackdown on unregistered broker-dealers by the SEC. This allowed Prometheum to label itself a “securities-regulated marketplace”, and Kaplan was then wheeled out yesterday to talk up the SEC’s approach to regulation that has allowed it to reach this exalted status.
Curiously, as many spotted, his comments mirrored those made by Democrat politicians in the matter of crypto regulation, with his pre-written notes seemingly taken verbatim from other hearings:
Wow, Prometheum’s CEO, whose sole credential is heading a special purpose ATS/BD for digital securities, sure seems to have a lot of opinions on unrelated topics like banking principles/stablecoins-or at least his prewritten notes curiously responsive to every Dem question does
— Scott Johnsson (@SGJohnsson) June 13, 2023
A clearly nervous Kaplan was supposed to be seen as a poster child for the “compliant path for crypto”, but as others pointed out, the path itself is riddled with complications and barriers put in place by the SEC, while Prometheum itself hasn’t even launched yet. US Representative Mike Flood was the most erudite in his dismemberment of Kaplan’s argument:
For those that didn’t stick around until the end of the @FinancialCmte hearing today, this exchange between @USRepMikeFlood and @PrometheumInc CEO Aaron Kaplan is an absolute must-watch.
Flood explicitly lays out why Prometheum’s claims that their SPBD approval is evidence of a… pic.twitter.com/yCDDKHiLea
— Alexander Grieve (@AlexanderGrieve) June 13, 2023
Matt Walsh, a partner in investment firm Castle Island Ventures, then went further down the rabbit hole on Prometheum, where he discovered strong links to China and a proprietary Promethum blockchain and token, which the SEC would almost certainly take a dim view of.
Spectacular Backfire
The entire thing seems to have been an attempt from Democrat lawmakers and the SEC to try and show that if one firm can become a registered broker-dealer then all crypto firms can, but the effort spectacularly backfired and merely put Kaplan in the firing line, as Walsh summarized:
What is going on here? Bizarre that this fringe player with no biz model is being held up as an example of compliance by the SEC when the actual businesses in the United States can’t get a fair shot. An SEC PSYOP to have the Dems oppose McHenry-Thompson market structure bill?
— Matt Walsh (@MattWalshInBos) June 14, 2023
One can assume Kaplan was relieved to have left the chamber and won’t be keen to return in a hurry.
