Controversy swirls as Prometheum secures SEC approval, intensifying scrutiny on crypto giants amidst a climate of increased oversight.
New York-based crypto firm, Prometheum, has made headlines in the crypto community with its recent approval from the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This development comes when significant players in the crypto space, including Binance and Coinbase, are facing increased scrutiny from US regulators.
The spotlight fell on Prometheum during the US House Financial Services Committee hearing titled “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem,” held on June 13. However, the announcement of Prometheum’s co-CEO, Aaron Kaplan, as a witness at the end of the hearing raised eyebrows and prompted questions.
Representative Mike Flood dismissed Prometheum’s approval from the SEC and FINRA as “nonsense” during the committee hearing. He highlighted that the firm does not offer trading in popular cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). Despite Flood’s skepticism, Kaplan argued that adhering to the existing regulatory frameworks established by the US Securities and Exchange Commission is the way forward for the digital asset industry in the United States. However, some crypto community members accused Kaplan of delivering pre-written notes that echoed the narratives of Democratic members of Congress or the SEC.
Prometheum’s approval has sparked further controversy as Castle Island Ventures partner, Matt Walsh, shared peculiar details about the firm. Walsh revealed that Prometheum’s investors include Wanxiang Blockchain and Hashkey Capital, and the company paid $1.5 million in sales commissions to Network 1 Financial Securities. These revelations have raised concerns and cast a shadow over the legitimacy of Prometheum’s operations.
SEC Chair’s Views Align With Prometheum CEO, Crypto Community Expresses Skepticism
Kaplan’s statements align closely with the views expressed by US Securities and Exchange Commission Chair Gary Gensler, who believes that most cryptocurrencies should be classified as securities. Gensler maintains that a regulated crypto exchange can operate if it does not facilitate the direct purchase or sale of cryptocurrencies.
The crypto community, including prominent figures like Cardano co-founder Charles Hoskinson and Gemini co-founders Tyler and Cameron Winklevoss, has expressed skepticism towards Prometheum. Many community members admit to having little knowledge about the relatively unknown firm.
Prometheum Ember Capital, a subsidiary of Prometheum, became the first US Securities and Exchange Commission qualified firm to offer custody services for digital assets in May after receiving FINRA’s approval to operate as a special purpose broker-dealer (SPBD) for digital assets. However, this approval has drawn controversy due to the revelation that several Prometheum employees are former SEC and FINRA staffers, raising concerns about potential conflicts of interest.
Adam Cochran, a prominent figure in the crypto community, has raised further controversy by shedding light on Prometheum’s covert operations and providing insights into its workings. The approval process has been criticized for the significant number of former SEC and FINRA employees among Prometheum’s staff.
As scrutiny on significant crypto exchanges intensifies, Prometheum’s Securities and Exchange Commission approval has ignited skepticism and concerns within the crypto community, highlighting the need for transparency and familiarization with the firm’s operations.