A relatively unknown crypto broker called Prometheum is making the headlines this week amid a massive crypto crackdown by the Securities and Exchange Commission. The firm’s co-founder reportedly supports the SEC, but there is more to this story than meets the eye.

Prometheum co-founder Aaron Kaplan appeared before a United States House Committee on June 13 to discuss crypto regulatory clarity. Remarkably, Kaplan appears to support the SEC’s stance of regulating crypto using old-fashioned securities laws created in the early 1900s.

General Partner at Castle Island Ventures, Matt Walsh, has been digging deeper. On June 15, he said that amid the SEC lawsuits against Binance and Coinbase, Prometheum got approval for a first-of-its-kind Special Purpose Broker-Dealer (SPBD) for digital asset securities.

“Then Prometheum’s CEO somehow gets a seat in front of Congress yesterday and starts reading off pre-written notes clearly coordinating narratives with Democratic members of Congress (or the SEC).”

Cinneamhain Ventures partner Adam Cochran looked into the Prometheum team, which includes former staff at the NYSE (New York Stock Exchange) and FINRA (the Financial Industry Regulatory Authority).

Furthermore, their chief compliance officer is Joseph Zangri. a former enforcement attorney for the SEC.

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Wall Street-based Prometheum was founded in 2017 and claimed to be SEC regulated in early 2021 but had yet to launch a product. The firm received FINRA approval for digital asset-qualified custody in May 2023 through its subsidiary Prometheum Ember Capital.

It does not allow customers to buy and sell Bitcoin or Ethereum, two of the largest crypto assets on the market, but supports some smaller, more obscure assets.

During Kaplan’s testimony, U.S. representative Mike Flood read a letter from Prometheum in April 2021 requesting more clarity on which digital assets are securities.

“There is not a consistent definition of a digital asset security within current law,” stated Flood.

He said that Prometheum’s claim that their SPBD approval is evidence of a clear path to regulatory compliance is absolute “nonsense.”

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

Matt Walsh suggested that the SEC and this group of Prometheum lawyers, former regulators, and insiders may be working in cahoots.

“Bizarre that this fringe player with no biz model is being held up as an example of compliance by the SEC when the actual businesses in the United States can’t get a fair shot. An SEC PSYOP to have the Dems oppose McHenry-Thompson market structure bill?”

Meanwhile, Adam Cochran revealed potential links to the Chinese Communist Party and concluded:

“These guys are using their SEC and FINRA connections to push an agenda to get certain assets deemed securities and for them to be the only approved player to capture the market.”

The post SEC Hands Prometheum Broker-Dealer Approval Amid Harsh Crackdown on Major Crypto Players appeared first on BeInCrypto.

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