Prometheum Responds to Republican Concerns on FINRA, SEC Approval

• Prometheum’s response to concerns raised by the committee emphasizes their technology’s compliance with federal securities laws.
• The committee addressed letters to FINRA and SEC about Prometheum’s approval process as the first Special Purpose Broker-Dealer for digital assets.
• Crypto influencer BitBoy Crypto, Coinbase CEO Brian Armstrong, and Rep. Scott Fitzgerald raised similar concerns.

Prometheum Ember Capital LLC’s response takes the spotlight amid growing concerns raised by Republican members of the House Financial Services Committee. The committee has reached out to the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) regarding the approval process for Prometheum as the pioneer Special Purpose Broker-Dealer (SPBD) for digital assets.

In reaction to these concerns, Prometheum issued a statement:

Prometheum purpose-built its technology with the goal to develop a market infrastructure for digital asset securities that is compliant with the federal securities laws.

Additionally, the company underlined its adherence to regulatory scrutiny by mentioning the SEC’s closure of its investigation into Prometheum’s past associations with Wanxiang and its affiliates. Additionally, the Committee on Foreign Investment in the United States (CFIUS) had not initiated a formal investigation. Breaking the story on Twitter immediately after the release of the letters was Eleanor Terrett, a journalist at Fox Business.

Dated August 9, 2023, separate letters from House Committee Chair Patrick McHenry and 22 other committee members were directed to Robert Cook, the President and CEO of FINRA, and Gary Gensler, the Chair of the SEC. The letters conveyed Republican concerns regarding the timing of Prometheum’s approval coinciding with legislative discussions on digital asset market regulations.

The letters also spotlighted qualms about Prometheum’s lack of customer service track record and its operational history. They also delved into the firm’s ties to Shanghai Wanxiang Blockchain Inc. (Wanxiang), a Chinese entity. Prometheum and Wanxiang had previously entered into a partnership in 2018 to jointly develop blockchain trading software. Although this collaboration was later terminated, concerns arose due to Wanxiang’s links to the Chinese Communist Party (CCP).

Rep. Scott Fitzgerald, one of the authors of the letters, voiced his reservations and called for transparency regarding the approval of a company “with strong ties to the CCP.” Meanwhile, Coinbase CEO Brian Armstrong praised the letters and shared his concerns, remarking, “Blatantly political behavior from a regulator undermines trust in our institutions.” He further emphasized the importance of equal treatment for all individuals under the law.

Adding to the conversation, crypto influencer BitBoy Crypto echoed similar concerns about Prometheum’s links to the SEC, suggesting a potential undisclosed crypto takeover plan involving the crypto startup and the SEC Chair.