Blockchain Association, a US-based crypto advocacy firm, sent a letter to the SEC’s inspector general, Deborah Jeffrey, requesting an investigation into the digital asset firm, Prometheum.
The SEC granted Prometheum a special purpose broker-dealer (SPBD) license. Since this decision, concerns have been raised about the regulator’s motives. Notably, just a few years ago, Prometheum was strongly against the SEC’s application process.
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: pic.twitter.com/dVtTs0yMEg
— Blockchain Association (@BlockchainAssn) July 12, 2023
In May 2023, Prometheum received an SPBD license from the Financial Institutions Regulatory Authority. However, it operates under the SEC.
Besides Prometheum, many crypto firms were against the delayed application process. However, the company’s initial license acquisition shocked the blockchain group and those companies.
Notably, crypto exchanges Robinhood Crypto and Coinbase said they had been in discussions with the SEC for months. Unfortunately, they did not get the SPBD license.
In June, Dan Gallagher, Robinhood’s chief legal officer, appeared before lawmakers during a House hearing to discuss crypto industry regulations. He strongly disagreed with the current registration process.
He said that the company followed Gensler’s instruction to register with the SEC. They went through a long 16-month process to get the SPBD license. Meanwhile, they were informed in March that all their hard work and efforts were pointless.
Prometheum Changed Its Stance Shockingly
Prometheum’s stance changed publicly, as per the Blockchain Association. In April 2021, the crypto firm requested clear regulations from the SEC. However, it later claimed that there was already a proper way to register digital assets. No new laws are needed, the company said.
Furthermore, the group highlighted how Aaron Kaplan, co-CEO and founder of Prometheum, got a chance to testify before Congress in June. Kaplan told Congress that in December 2019, the company began independent development, separate from its China-based partners.
Meanwhile, the SEC filing shows that company kept its partnership with Hashkey and Wanxiang till 2021. These firms are subsidiaries of Chinese entities. The Blockchain Association stated:
We are concerned that the Commission granted Prometheum a ‘sweetheart’ deal in exchange for support of the Commission’s policy goals.
However, they could give Prometheum unfair advantages in the market, the group added. At the start of 2023, it was an unknown company.