Representative Ritchie Torres, a New York Democrat, recently called for an investigation by the US SEC into the circumstances that led to Prometheum’s controversial crypto regulation.
See below for all the details.
US: request for SEC investigation highlights need for more crypto regulation
As anticipated, Representative Ritchie Torres (DN.Y.) has filed requests for two investigations into the controversial license awarded to Prometheum Ember ATS, which allows it to operate as a crypto exchange despite the fact that it is not currently involved in such activity and may not be in compliance with current regulations.
More specifically, Torres raises questions about whether Prometheum’s issuance of the SPBD (Special Purpose Broker Dealer) license was a political action by the SEC rather than a genuine effort to integrate digital assets into the current regulatory framework.
Requests will be sent to the SEC‘s Office of Inspector General and the Government Accountability Office.
In reference to the infamous business facades in Russia, which aimed to fool people into believing that there were authentic villages behind them, Torres wrote the following:
“Prometheum appears to be nothing more than a Potemkin platform, operating as a timely talking point for crypto critics rather than an actual trading platform for crypto clients. Doubtful decision to license deceptive digital asset platform reflects Chairman Gary Gensler’s latest attempt to politicize filing process to a rare extent seen in SEC history.”
Prometheum’s issuance of the license has become a hot topic in the cryptocurrency industry in recent weeks as the SEC and Prometheum’s co-CEO Aaron Kaplan argue that this permission proves that no new regulations or laws are required for digital assets such as Bitcoin, Ether and other tokens.
This is taking place even as Congress is working on several bills to clarify the regulatory framework for the digital asset sector.
Seira’s words, “Kaplan has a license, but no business.”
During a hearing on the digital resources market structure bill before the House Financial Services Committee on 11 June, Kaplan testified about the above.
This created a backlash with the other witnesses and raised questions about why the SEC had included him on the witness list, also considering his company’s relatively low profile.
Kaplan said he appeared at the request of minority member Maxine Waters (D-Mich.).
However, despite the outrage in the crypto community over his pro-SEC stance, a common criticism directed at Kaplan and his company is that although he is licensed and operates an alternative trading system (ATS) that can trade digital asset securities, he does not currently list all tokens and it is unclear when or how he might do so.
Rodrigo Seira, a lawyer at cryptocurrency firm Paradigm Capital, pointed out the apparent irony of this situation in the Unchained podcast, hosted by Laura Shin, stating the following:
“Kaplan has a license but no business.”
Torres’ letters were sent in response to a request submitted on 10 July by Sen. Tommy Tuberville (R-Ala.) and five other Republican members of Congress to Attorney General Merrick Garland and Gensler of the SEC.
Specifically, calling for an investigation into Prometheum for its ties to Chinese entities Shanghai Wanxiang Blockchain Inc. and HashKey, as well as alleged ties to the Chinese Communist Party.
Recently, the Blockchain Association trade group actually filed a similar application with the SEC, raising the same allegations. However, despite the outrage generated, no concrete evidence of wrongdoing has been presented so far, and there may not be any.
Marisa Coppel, senior consultant at the Blockchain Association, wrote the following in a letter:
“The industry is waiting for answers and we ask your office to launch an investigation to uncover any irregularities or confirm that these allegations have no basis.”