SEC Faces Scrutiny Over Controversial Deal with Prometheum

The U.S. Securities and Exchange Commission (SEC) could be investigated for its “haphazard and heavy-handed approach to digital assets” or, more specifically, for its “sweetheart deal” with cryptocurrency platform Prometheum.

Representative Ritchie Torres sent requests to the Inspector General of the SEC, Deborah Jeffrey, and the Comptroller General of the Government Accountability Office, Gene Dodaro, on July 13. He writes:

“The SEC refuses to bring even the barest amount of clarity to the application of securities law to digital assets. Its preferred means of communicating is neither rule nor guidance but enforcement.”

Torres emphasizes the SEC’s decision in May to grant a particular broker-purpose dealer (SPBD) license to Prometheum, a digital asset platform founded in 2017 by two U.S. financial attorneys.

According to Torres, “Prometheum appears to be nothing more than a Potemkin platform, functioning as a timely talking point for crypto critics as opposed to a genuine trading platform for crypto customers.”

He requests an investigation into the SEC’s failure to establish a “workable process for registering” digital asset platforms and Prometheum’s “unusual backdoor deal.”

Prometheum has recently become a public enemy in the crypto industry, and Torres’ investigation request is not the first of its kind.

In June, the business was thrust into the limelight after its co-founder, Aaron Kaplan, testified before Congress.

Kaplan’s general support for the SEC’s regulatory strategy under current securities laws appears to be the source of the issue.

Immediate speculation began to circulate on Twitter about Prometheum, emphasizing its possible ties to Chinese investors, after the hearing.

The Blockchain Association requested information about the company from the SEC on June 15.

In July, six members of Congress urged the SEC to investigate Prometheum’s “ties to the Chinese Communist Party.”