SEC-licensed digital asset trading platform doesn't allow its customers to trade Bitcoin or Ether, the two assets that make up more than 60% of the digital asset market.
Prometheum threw a nice curveball in a week that already hasn’t been going well for crypto.
Prome─what?
No, it’s not the 2012 sci-fi flick (that was Prometheus) that is in question here. Prometheum is the latest bizarro story coming out of crypto land:
Time for a quick explainer on the latest plot twist in the tale of the crypto industry against the SEC.
What or Who Is Prometheum?
Prometheum is the first Special Purpose Broker-Dealer. This is another way of saying it’s the first officially SEC-licensed platform for trading digital asset securities (aka cryptocurrencies).
Indeed!
Prometheum has the SEC’s permission to offer the trading of digital asset securities on its platform. Unfortunately, there is currently no way for crypto protocols to register as such with the SEC, which means there is nothing to trade on Prometheum.
But how did this little-known company manage to get the elusive SEC approval when Coinbase and others tried and failed for years?
It turns out that Prometheum has been around for a while - more precisely since 2017. While the company did not have a product back then ─ and does not have one now ─ it does have a $15M funding round from 2021 to show. It also does have several former SEC staff hired, along with former FINRA staff, which is a side branch of the SEC.
Interesting…
Even more interesting is the fact that Prometheum raised a total of $48M from Wanxiang, a company formed by Lu Guanqiu, a former senior Communist Party official:
But the thick plot puts on some more fat here. The raises were facilitated by “Network 1 Financial Services,” a broker that is also believed to be affiliated with the CCP and has a shady regulatory record:
Like any good sc─special purpose broker-dealer, Prometheum promises its own blockchain and token (use cases TBD):
The TLDR:
Prometheum is an SEC and CCP-affiliated company that wants to offer crypto trading because it has a license to do so (likely thanks to its connections) but can’t do so since the regulatory process is kaput.
Got it?
That leaves the question: What the heck was its CEO doing at a Congress hearing about crypto?
Why Is the Prometheum CEO at a Congress Hearing?
Short answer: Because the SEC wanted him there.
Long answer: Because he can make a good argument for why the SEC’s argument about regulation being just fine is valid.
Interestingly enough, someone was perfectly well-prepared for the hearing. At least for the questions coming from Democratic members of Congress:
However, CEO Aaron Kaplan, whose company has maintained that the SEC does indeed offer a “clear path to regulatory compliance,” could not answer why his platform does not offer BTC or ETH trading:
That is probably because Prometheum has no grounds to do so. This leaves us with the final question:
What is actually going on here?
Theories on What Prometheum Is
Adam Cochran offered a few more elaborate theories: Prometheum could be SEC plants or simply grifters who are in it for the money.
Adam Bailey had a similar take. Either it’s all a big nothingburger or we have a new sly scam on our hands or Prometheum is actually an elaborate SEC psyop.
Add this one to the pile of “bizarre things that have happened in crypto.” Story to be continued…
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