SEC Could Be Probed for Prometheum ‘Backroom Deal’
July 15, 2023

SEC Could Be Probed for Prometheum ‘Backroom Deal’

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Congressman Ritchie Torres has submitted a formal request to scrutinize the controversial connection between the Securities and Exchange Commission (SEC) and cryptocurrency platform Prometheum, marking the latest move in the legal and political storm involving the SEC.

Torres dispatched letters on July 13 to the SEC’s Inspector General Deborah Jeffrey and the Government Accountability Office’s Comptroller General Gene Dodaro. He expressed frustration over the SEC’s lack of transparency in applying securities laws to digital assets, further emphasizing the Commission’s use of enforcement over rulemaking or guidance:

“The SEC is like an overzealous traffic agent who arbitrarily tickets drivers for speeding while keeping everyone endlessly guessing about the speeding limit. Regulation by enforcement is no way to regulate.”

Torres’ criticism is concentrated on the SEC’s decision in May to award a Special Purpose Broker-Dealer (SPBD) license to Prometheum. The crypto platform, established in 2017, has drawn skepticism due to its perceived function as a political tool rather than a legitimate trading platform.

Co-founder of Prometheum, Aaron Kaplan, became a controversial figure after endorsing the SEC’s current regulatory approach during a congressional hearing in June. Kaplan’s support, coupled with swirling social media speculation over Prometheum’s possible links to Chinese investors, has only added to the growing debate surrounding the platform.

Marisa Tashman Coppel of the Blockchain Association submitted a request to the SEC on June 15, seeking clarity on Prometheum, calling it “suspicious.”

A month later, a collective of U.S. lawmakers pushed the SEC to delve into the company’s alleged ties to the Chinese Communist Party.

As Torres rallies for an examination into the SEC’s process for registering digital assets platforms and its arrangement with Prometheum, asking Jeffrey,

“Examine the SEC’s failure to create a rigorous but workable process for registering real-world digital assets platforms and to examine the unusual backroom deal that the SEC has brokered with Prometheum.”

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