Republicans in the financial services industry, led by Chairman Patrick McHenry (NC-10), are asking regulatory agencies about the recent approval of Prometheum Ember Capital LLC as a separate broker-dealer for digital assets. Their questions are directed to the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).
A relatively unknown company at the start of 2023, Prometheum’s ability to gain SEC approval as a Registered Special-Purpose Broker-Dealer has attracted attention.
Questions have been raised about the context of Prometheum’s approval, especially since it came shortly after a joint hearing by the House Financial Services Committee and House Agriculture Committee on digital assets. Some have questioned whether the approval was intended to demonstrate the adequacy of existing regulation for the digital asset sector.
Prometheum’s previous partnership with Shanghai Wanxiang Blockchain Inc. to develop blockchain trading software has been noted. Although the partnership has ended, the involvement of a Chinese company has been highlighted in the early days of Prometheum. Reports suggest that a Chinese entity owns a portion of Prometheum and one of their representatives, Feng Ziao, is a director at Prometheum. The connection between Wanxiang and the Chinese Communist Party (CCP) has been cited over data privacy and national security concerns.
The recent statements by Prometheum’s co-CEO Aaron Kaplan have attracted attention on social media. His views, which are closely aligned with the SEC’s position, differ from those of many in the industry. Kaplan’s belief in the adequacy of federal securities laws for crypto regulation has been met with differing opinions, especially as Prometheum has previously emphasized the importance of clear regulation.
Prometheum leadership’s connections to regulatory agencies such as FINRA and the SEC have been discussed. Crypto analyst Adam Cochran has suggested that these connections may have influenced Prometheum’s regulatory approvals.
Recent articles indicate that US lawmakers, including Senator Tommy Tuberville and members of Congress such as Ralph Norman and Blaine Luetkemeyer, have called for DOJ and SEC investigations into Prometheum. Differences between Prometheum’s statements and the documents it has filed with the SEC, particularly regarding its relationship with Wanxiang, are some of the reasons cited for these calls.