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

A testimony given at a United States House of Representatives hearing by the blockchain firm’s co-founder, Aaron Kaplan, has drawn the attention of those in the crypto space.

The relatively under-the-radar crypto company Prometheum has been thrust into the spotlight after a recent testimony from its co-founder before a United States House Committee, discussing crypto regulatory clarity.

On June 13, Prometheum co-founder and co-CEO Aaron Kaplan appeared before the U.S. House at a hearing to discuss providing regulatory clarity to the crypto industry.

Contrary to recent commentary from crypto industry players such as Coinbase, Kaplan’s testimony appears to be supportive of regulating crypto under current securities laws — a view also shared by the Securities and Exchange Commission.

This Prometheum storyline has got to be the strangest thing I have seen in awhile in this industry. Has anyone actually looked into this? Beyond bizarre…

— Matt Walsh (@MattWalshInBos) June 14, 2023

Attention was also brought to Kaplan’s testimony on social media, including a widely shared June 14 Twitter thread from Castle Island Ventures partner Matt Walsh, who shared what he claims are “bizarre” facts about the company and its co-founder.

The thread has also prompted many — including Cardano and Ethereum co-founder Charles Hoskinson — to ask just who Kaplan and Prometheum are, and why they appear to be unheard of before.

Who the hell are these Prometheum guys? https://t.co/PHuqVGStlS

— Charles Hoskinson (@IOHK_Charles) June 14, 2023

The Wall Street-based Prometheum was founded in 2017 by Aaron and Benjamin Kaplan, co-CEOs of the firm. The pair are also listed as attorneys at the financial services-focused law firm Gusrae Kaplan.

Subsidiaries of the company are notable for their registrations with the SEC and approvals from the Financial Industry Regulatory Authority.

In May, subsidiary Prometheum Ember Capital was the first firm to offer custody of digital assets as a qualified custodian after receiving FINRA approval to operate as a special purpose broker-dealer for digital assets.

In October 2022, its subsidiary Prometheum Ember ATS launched its SEC-registered alternative trading system offering digital asset trading, clearing, settlement, and custody.

What did Kaplan say?

In his prepared testimony, Kaplan argued that multiple frameworks provided by the SEC have “clearly laid out” a “compliant path forward for crypto in the United States.”

He even provided a glowing review of the regulator, calling it “the most capable financial markets regulatory agency in the world.”

Prometheum’s stance is clear: There is a path forward for digital assets in the U.S. through the current regulatory frameworks set up by federal securities laws. Hear Aaron Kaplan’s testimony in front of the House Financial Committee here: https://t.co/qqVd0ryqe2#digitalassets

— Prometheum (@PrometheumInc) June 14, 2023

Kaplan claimed crypto exchanges and custodians “are required to be regulated by the SEC” and slammed those not currently regulated as being “reckless, unlawful platforms.”

He went on to say existing securities laws and regulations apply to cryptocurrencies and those who argue for new crypto-specific laws are “simply not willing to comply.” He added new laws are “not in the best interest of the investing public or the blockchain industry.”

Related: Crypto industry ‘destined’ to be BTC-focused due to regulators: Michael Saylor

However, some have criticized the crypto firm, saying Prometheum doesn’t have much to show product-wise despite its years in business and regulator approvals.

During the hearing, Kaplan was asked by Representative Mike Flood if Prometheum offered trading for Bitcoin (BTC) or Ether (ETH), which together make up nearly 65% of the $1 trillion crypto market cap, according to CoinGecko.

Kaplan responded to both questions by saying it did not.

For those that didn’t stick around until the end of the @FinancialCmte hearing today, this exchange between @USRepMikeFlood and @PrometheumInc CEO Aaron Kaplan is an absolute must-watch.

Flood explicitly lays out why Prometheum’s claims that their SPBD approval is evidence of a… pic.twitter.com/yCDDKHiLea

— Alexander Grieve (@AlexanderGrieve) June 13, 2023

‘Bizzare’ claims

Meanwhile, theories about the company are are swirling on social media, with some alleging the firm’s links to the Chinese Communist Party, pointing to 2019 SEC filings from Prometheum stating HashKey and Shanghai Wanxiang Blockchain are “strategic partners and joint venturers.”

Others have pointed to Prometheum’s team that includes former SEC and FINRA staffers. 

Cointelegraph contacted Prometheum to ask for a comment surrounding some of these claims.

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