Blockchain Association calls for investigation into Prometheum over alleged ‘sweetheart’ SEC deal

Thursday, 13 Jul 2023

Cointelegraph By Turner Wright

Original Article

The group raised concerns over Prometheum’s changing position on crypto regulatory clarity and under what circumstances the firm obtained a special purpose broker-dealer license.


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The Blockchain Association, a United States-based crypto advocacy group, has submitted a letter to the U.S. Securities and Exchange Commission’s (SEC) Office of Inspector General calling for an investigation into crypto firm Prometheum.

In a July 12 letter, the Blockchain Association requested SEC Inspector General Deborah Jeffrey look into the Financial Industry Regulatory Authority’s approval of Prometheum’s special purpose broker-dealer (SPBD) license. The group also raised concerns about the means by which co-CEO Aaron Kaplan secured a seat testifying before the U.S. House Financial Services Committee in June.

The advocacy group said the fact Prometheum had been able to obtain an SPBD license in May 2023 was “concerning” given the uncertainty around U.S. securities laws applying to crypto firms. According to the Blockchain Association, Prometheum changed its public position from calling for regulatory clarity from the SEC in April 2021 to claiming “there exists a clear pathway to registration for digital assets and legislation is unnecessary.”

“We are concerned that the Commission granted Prometheum a ‘sweetheart’ deal in exchange for support of the Commission’s policy goals, or that Prometheum is leveraging personal connections with the Commission to gain an unfair advantage in the market,” said the association. “Most significantly, we are concerned that [SEC] Chair [Gary] Gensler is using Prometheum and the SPBD licensure process as a means to thwart congressional efforts toward legislation by continuing to spread the false narrative that the law is already clear with regard to digital asset securities.”

1/ Today, @blockchainassn submitted a letter to the SEC Office of Inspector General requesting the OIG open an investigation into potential impropriety surrounding the approval of Prometheum as a first-of-its-kind Special Purpose Broker-Dealer.@KMSmithDC stated:

— Blockchain Association (@BlockchainAssn)

July 12, 2023

Related: Blockchain Association seeks info from Fed, FDIC and OCC on ‘de-banking’ crypto firms

The call for an investigation into Prometheum followed a Freedom of Information Act request from the advocacy group in June seeking documents and communications related to the firm’s license. According to the Blockchain Association, it was still “waiting for answers” regarding the information.

Cointelegraph reached out to Kaplan but did not receive a response at the time of publication. Several U.S. lawmakers have also called for a Department of Justice and SEC investigation into Prometheum over alleged ties to China-based firms, which seemingly has no connection to the Blockchain Association’s allegations.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?


Cointelegraph By Turner Wright

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