In a recent development, Representative Ritchie Torres (D-N.Y.) has demanded investigations into the license granted to Prometheum Ember ATS by the United States Securities Exchange Commission (SEC). The license allows Prometheum to function as a cryptocurrency exchange, despite its inactivity in the sector and potential non-compliance with current regulations.
Representative Torres raises concerns about the SEC’s approach to digital assets, referring to the agency’s deal with Prometheum as a “sweetheart deal.” He questions whether the granting of Prometheum’s Special Purpose Broker Dealer (SPBD) license was driven by political motives rather than a genuine effort to incorporate digital assets into existing regulatory frameworks.
In a scathing statement, Torres describes Prometheum as a “Potemkin platform,” alluding to historical facades in Russia meant to deceive observers into believing there was substance behind them. He accuses SEC Chair Gary Gensler of politicizing the registration process to an unprecedented extent.
Torres emphasizes the SEC’s May decision to issue a special broker purpose dealer (SPBD) license to Prometheum, a digital assets platform established in 2017 by two American financial attorneys. The congressman questions both the SEC’s failure to establish a functional registration process for digital assets platforms and the nature of the “unusual backdoor deal” with Prometheum.
The issuance of Prometheum’s license has sparked controversy within the crypto industry. While the SEC and Prometheum’s co-CEO Aaron Kaplan argue that the permit validates the sufficiency of existing regulations for digital assets like bitcoin and ether, critics point out that the company currently does not list any tokens. This discrepancy raises doubts about Prometheum’s readiness to engage in actual trading activities.
Additionally, questions have been raised regarding Kaplan’s appearance as a witness before the House Financial Services Committee on June 11. Some have speculated whether the SEC orchestrated his inclusion on the witness list. Kaplan maintains that he appeared at the request of Ranking Minority Member Maxine Waters (D-Mich.).
Apart from facing backlash from the crypto community for his support of the SEC, Kaplan and his firm have faced criticism for having a license but lacking a functional business. While Prometheum operates an alternative trading system (ATS) capable of trading digital asset securities, it currently does not list any tokens, leaving uncertainty surrounding its plans to do so in the future.
Congressman Torres’ request for investigations follows a separate inquiry initiated by Senator Tommy Tuberville (R-Ala.) and five other congressional Republicans, urging Attorney General Merrick Garland and SEC Chair Gary Gensler to examine Prometheum’s alleged ties to Chinese entities Shanghai Wanxiang Blockchain Inc. and HashKey, and their alleged connections to the Chinese Communist Party. The Blockchain Association, an industry trade group, has also called for a similar investigation into these claims.
Despite the mounting concerns and allegations, no concrete evidence of impropriety has been presented thus far. The industry awaits answers, and the Blockchain Association’s senior counsel, Marisa Coppel, has requested an investigation to either confirm or dispel the insinuations.
As this controversy unfolds, the outcome of these investigations will likely shape the future of digital asset regulation and the relationship between the SEC and cryptocurrency platforms like Prometheum.
