US Representative Torres demands investigation of SEC deal with Prometheum

The United States Securities and Exchange Commission might be investigated for a “haphazard and heavy-handed approach to digital assets.”

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

On July 13, U.S. Representative Ritchie Torres filed requests to the SEC’s Inspector General Deborah Jeffrey and the Government Accountability Office’s Comptroller General Gene Dodaro. In the letters published by Torres on Twitter, 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 May decision to grant a special broker purpose dealer (SPBD) license to Prometheum, a digital assets platform created in 2017 by two U.S. financial attorneys. According to Torres, “Prometheum appears to be nothing more than a Potemkin platform, operating as a timely talking point for crypto critics rather than a true trading platform for crypto customers.”

He calls for an examination of both the SEC’s failure to create “a workable process for registering” digital assets platforms and “the unusual backdoor deal” for Prometheum. 

Related: ‘Who the hell’ is Prometheum and what did it say to Congress about SEC compliance?

Prometheum recently became a public enemy in the crypto industry, and Torres’ demand for investigation is not the first. The company was thrust into the spotlight after its co-founder, Aaron Kaplan, testified before Congress in June. The problem seems to be Kaplan’s general support of the SEC’s regulatory strategy under current securities laws.

Immediately after the hearing, theories about Prometheum started swirling on Twitter, emphasizing its possible ties to Chinese investors. On June 15, the Blockchain Association filed a request with the SEC, seeking information about the company. In July, six U.S. lawmakers called on the SEC to investigate Prometheum’s “ties to the Chinese Communist Party.”

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