Prometheum, a successful SEC-registered exchange, is accused of being incubated by China and facing allegations of securities fraud.

The cryptocurrency exchange platform Prometheum not only successfully registered with the SEC, but its CEO also praised the SEC's regulatory policies during a hearing in June. However, five Republican lawmakers have written to the SEC Chairman and the Attorney General, accusing the CEO of perjury for discrepancies between his Congressional testimony and the information submitted to the SEC. They are particularly concerned that the platform is incubated and funded by a Chinese company.

What is Prometheum?

According to The Block, Prometheum initially registered with the SEC in October 2022 to provide digital asset securities trading, clearing, settlement, and custody services.

Under Prometheum, Prometheum Ember ATS is registered with the SEC as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). Founder and CEO Aaron Kaplan emphasized:

Digital assets have long been trading on unregulated platforms rather than operating on platforms within the current SEC digital asset securities framework.

In addition, the U.S. Financial Industry Regulatory Authority (FINRA) granted "digital asset securities custodian authority" on May 17th of this year to Prometheum. Aaron Kaplan stated that Prometheum is not only a "special purpose broker-dealer" able to custody crypto assets but has also been approved as an alternative trading system (ATS) for digital asset securities.

The platform is expected to officially launch in the third quarter of this year.

CEO Praises SEC in Congress

Despite this, the crypto community had a vague impression of Prometheum in the first half of the year until CEO Aaron Kaplan attended a congressional hearing in June and lavishly praised SEC Chairman Gary Gensler's stance, causing some concerns.

During the hearing, Aaron Kaplan refuted the common perception in the crypto industry about regulation and claimed that existing securities laws are fully sufficient to regulate the crypto market. He also provided examples from his own platform to support the argument that Gary Gensler's call for industry players to "come in and register" is genuine.

Call for Investigation into Prometheum

Blockchain Association Requests SEC to Disclose Communication Records

The Blockchain Association requested the SEC to disclose communication information between the SEC and Prometheum the day after the hearing, citing the Freedom of Information Act.

Their legal counsel raised several allegations:

• Aaron Kaplan somehow secured a witness seat at the hearing.

• Prometheum paid $1.5 million in commissions to a Chinese entity.

• Prometheum failed to provide a specific compliance path.

• Prometheum was unable to deliver token trading services, contradicting their claim of "securities law applying to crypto."

Gemini Founder Points Out Suspicions

Gemini co-founder Tyler Winklevoss referenced Adam Cochran's analysis, listing several suspicions regarding Prometheum:

• No product launch in six years.

• Hiring multiple former SEC and FINRA employees.

• The CTO is a contractor residing in the Isle of Man with no visible online presence.

U.S. Senators Write to DOJ, SEC: Aaron Kaplan Committed Perjury

Five senators, including Senator Tommy Tuberville from Alabama, signed an open letter requesting U.S. Attorney General Merrick Garland and SEC Chairman Gary Gensler to investigate the fact that Aaron Kaplan blatantly committed perjury during the congressional hearing.

The letter cited Aaron Kaplan's testimony during the hearing.

It claimed that since December 2018, Prometheum had ceased cooperation with Chinese companies and started independently developing a blockchain trading system that no longer involved resources, technology, or any other aspects related to Wanxiang Blockchain or any affiliated companies.

However, senators pointed out that the financial reports from 2020 and 2021, as well as SEC documents, completely contradicted the congressional testimony. Prometheum continued to engage with Chinese companies and adopt related technologies until October 2021.

The senators concluded:

Committing perjury in Congress is a serious crime, and registering with the SEC through falsification and misleading statements constitutes securities fraud. The inconsistencies between Prometheum's congressional testimony and the information submitted to the SEC should be thoroughly investigated.