1 year ago
The pursuing is simply a impermanent station from Hamilton Keats, CEO and co-founder of Krayon Digital.
In an effort to show that there’s a way guardant for crypto firms wrong the existing regulatory framework, the SEC extended an invitation to Prometheum to the House Financial Services Committee proceeding connected integer assets.
This firm, comparatively chartless until now, is being held up arsenic an illustration of compliance by the SEC but Prometheum’s inheritance is sketchy. It’s alleged that the steadfast is connected to aggregate crypto scams and perchance funded by the Chinese Communist Party (CCP) 
.
The timing of this proceeding dovetails with a play of aggravated scrutiny by the SEC against different firms who person strived regulatory dialog – firms who arguably merit a amended accidental than Prometheum astatine operating wrong a compliant framework.
Let’s unpack this bizarre bid of events
On June 13th, the House Financial Services Committee held a hearing connected “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem.”
Aaron Kaplan, Co-CEO of Prometheum, was invited to attest earlier the committee. Until this week, Prometheum was comparatively chartless successful the crypto space.
During Kaplan’s testimony, it became evident that his responses were scripted. Committee members and viewers alike questioned his credibility; his answers echoed the SEC’s existing narrative. As Scott Johnsson remarked:
“Wow, Prometheum’s CEO, whose sole credential is heading a peculiar intent ATS/BD for integer securities, seems to person a batch of opinions connected unrelated topics similar banking principles/stablecoins-or astatine slightest his prewritten notes curiously respond to each Dem question.”
Who precisely is Prometheum and wherefore are they applicable to this committee?
In the midst of the SEC’s litigation lawsuit against Coinbase and Binance, Prometheum received approval for a first-of-its-kind Special Purpose Broker-Dealer (SPBD) licence for integer plus securities. According to Kaplan, this licence represents a compliant way for crypto firms, suggesting nary request for updated regulations and securities laws.
Committee subordinate John Rose disputed Arron Kaplan’s statements:
“Gensler’s support of this 1 peculiar intent broker trader licence does not mean that the existent strategy is working. Why? Because an ATS cannot facilitate trading for immoderate of the unregistered securities not offered nether a valid exemption. Additionally, Gensler and the Democrats and seemingly Mr Kaplan allege that astir each tokens are unregistered securities truthful this support does thing for retail investors and the wide public… Isn’t it close that determination presently aren’t immoderate registered integer plus securities with existent lawsuit request and liquidity. For example, tin an ATS connection Solana oregon Cardano, which the SEC has precocious alleged are unregistered securities, to retail, non-accredited investors connected its ATS today?”
The reply is simply a resounding no. However, the projected authorities would let an ATS to database and commercialized integer assets alongside payment-stable coins and integer commodities.
It gets worse
A peculiar intent broker-dealer cannot presently custody some integer plus securities and commodities connected the aforesaid level connected behalf of retail investors. With the existing instrumentality classifying integer assets either arsenic securities oregon commodities, it renders the SPBD licence fundamentally useless.
Moreover, the SEC has suggested that they expect integer assets to beryllium registered by promoters, a non-issue successful a satellite of open-source projects with anonymous oregon pseudonymous founders.
There are presently zero tokens registered with the SEC due to the fact that the existing authorities is unfeasible for nationalist blockchain networks.
The existing regularisation doesn’t alteration licensed broker-dealers to run successful the integer plus space. Representative Mike Flood rebutted Prometheum’s statements during the proceeding arsenic purely nonsensical. Prometheum’s clients can’t adjacent commercialized BTC and ETH, which comprise 60% of the integer plus market.
As Mike Flood enactment it:
“If the existent strategy is working, wherefore can’t your customers commercialized the astir fashionable and widely-used integer assets?”
The evident reply is that it’s not, and Prometheum’s claims that changes to authorities aren’t required conscionable don’t marque sense.
Why is Prometheum obstructing regulatory improvements?
If Prometheum allegedly works to found a broker-dealer concern successful the integer plus space, wherefore are they obstructing projected regulatory improvements that would payment the industry?
Enter Prometheum Chain: Prometheum’s trading L1 has its token that’s already been sold to members of the Chinese Communist Party (CCP) (laughing emoji).
Prometheum has raised astir $50m successful backing to date. Throughout the money raising process, they utilized a New Jersey-based boutique concern bank, Network 1 Financial Securities – a steadfast with an unscrupulous way record, including implicit 20 regulatory oregon civilian actions against them, and has further ties to the CCP.
Maybe we should presume credible securities experts negociate Prometheum…
Well, that’s a nary again. Prometheum is tally by the Kaplan family, including Aaron and Benjamin Kaplan, lawyers by commercialized who attended a present unaccredited instrumentality schoolhouse earlier joining their father’s instrumentality firm.
How did a household of lawyers go the archetypal steadfast approved for an SPBD licence and extremity up connected the committee testifying successful favour of the SEC’s existent attack to crypto-regulations?
Why aren’t existent businesses being fixed a just shot?
Apparently, Hiring ex-SEC staffers goes a agelong mode to getting licensed. Prometheum’s squad comprises Rosemarie Fanelli, a erstwhile NYSE and FINRA employee; John Tornatore from CBOE; and Joseph Zangri, their Chief Compliance Officer antecedently served arsenic a Senior Enforcement Attorney for the SEC.
This tangled web of convoluted narratives and imaginable improprieties begs the question: is the platform stacked against the genuine advancement of blockchain exertion and integer assets successful the look of existent regulation? Why aren’t existent businesses similar Coinbase and Kraken fixed a existent shot?
Hamilton Keats is CEO and co-founder of Krayon Digital, a supplier of MPC-based integer plus wallets for SMEs. Prior to gathering Web3 infrastructure with Krayon, Hamilton co-founded Platform One, a London-based wealthiness absorption platform, and worked astatine HSBC and DVB Bank. He holds a BSc grade successful physics from the Imperial College London. Twitter
The station The SEC’s unusual pick: Unmasking Prometheum appeared archetypal connected CryptoSlate.
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