Bitrabo Editorial
In recent crypto news, the Prometheum story has emerged as one of the most unusual occurrences in the industry. However, it has received little attention thus far. Prometheum is the first company to receive approval from the Financial Industry Regulatory Authority (FINRA) as a special purpose broker-dealer (SPBD) for securities with digital assets. Prometheum’s co-CEO, Dr. Aaron Kaplan, highlighted the need for better customer protections for securities traded on platforms that currently do not meet U.S. federal securities laws.
Kaplan’s Testimony in US Congress
Dr. Aaron Kaplan, the CEO of Prometheum, testified before the U.S. House Committee on Financial Services on digital assets. During his hearing, Kaplan read off prepared notes that align with the views of Democratic members of Congress and the SEC. He argued that existing securities laws are sufficient and no updated rules are required for cryptocurrencies. However, Republican Mike Flood challenged this claim, pointing out that if digital assets are considered “unregistered securities,” then operating a broker-dealer for them would be contradictory.
The Prometheum team asserts that all L1s (Layer 1 blockchains) are securities and should be traded on their platform. Interestingly, they have their own chain and token. It’s worth noting the connection between Prometheum and Wanxiang Blockchain, a Chinese Communist Party affiliate. Wanxiang’s most famous employee is Vitalik Buterin, the co-founder of Ethereum. Buterin met with Wanxiang’s CEO in 2015 and purchased a significant amount of Ethereum, saving the project from failure.
Prometheum’s Crypto-Securities License and Shady Connections
Prometheum obtained a crypto-securities license from FINRA despite not yet offering any tokens. This has raised questions about the approval process. Prometheum hired former employees of FINRA and SEC, which coincided with the receipt of approvals. Additionally, Prometheum raised funds and paid a large sum in sales commissions to a New Jersey-based firm called Network 1 Financial Securities. This firm has a Chinese subsidiary and a troubling compliance record with multiple regulatory and civil cases against it. Notably, Network 1 Financial was involved in a blockchain project scam in 2017.
A Possible SEC PSYOP Against Crypto Exchanges?
Matt Walsh suggests that Prometheum’s story and Kaplan’s hearing could be a coordinated effort by the SEC and US Democrats. Walsh believes that this focus on a fringe player with no clear business model is a distraction from established US crypto exchanges’ compliance efforts. Adam Cochran, an expert in the field, presents three possible explanations for Prometheum’s situation: a regulatory deal with the SEC, leveraging connections to classify assets as securities, or a scam orchestrated by “grifters” who raised money from questionable sources.
There is an underlying concern about the SEC’s approval of Prometheum despite suspicions surrounding the company’s background. Cochran concludes that something fishy is happening, and Gensler’s approval of Prometheum is a red flag.
Amidst these developments, the entire crypto market has experienced a setback following the Federal Reserve’s interest rate decision.