- Congressman Ritchie Torres is calling for two investigations into the SEC’s issuance of a Special Purpose Broker Dealer (SPBD) license to Prometheum Ember ATS, which currently has no active business.
- The probe, if undertaken, aims to uncover whether the granting of this license was a political strategy by the SEC, spearheaded by Chair Gary Gensler.
Ritchie Torres, Democratic Representative for New York, is demanding insight into a contentious crypto license awarded to Prometheum Ember ATS, despite it not being operational in the digital asset exchange space nor equipped to be so under existing regulations.
🚨 @SECGov is acting like an overzealous traffic cop arbitrarily ticketing drivers while keeping the speed limit a secret.
It prefers to communicate by enforcement rather than by rules or guidance. But that's no way to regulate digital assets.
I'm calling for an investigation. https://t.co/ZbiSk6oQ9F pic.twitter.com/n0hijAREDC
— Rep. Ritchie Torres (@RepRitchie) July 13, 2023
A Potemkin Platform?
The primary concern of Torres revolves around the issuance of the Special Purpose Broker Dealer (SPBD) license to Prometheum. The Congressman suspects that the SEC might be using Prometheum as a smokescreen, a so-called “Potemkin platform”, rather than incorporating digital assets into the existing regulatory framework effectively.
Drawing on historical examples of illusionary business facades in Russia, Torres suggests Prometheum is merely a front, crafted to quieten crypto critics and politicalize the registration process—an uncommon occurrence in the history of the SEC. The congressman’s letters, intended for the SEC’s Office of the Inspector General and the Government Accountability Office, highlight these concerns.
Prometheum’s license has sparked fiery debates within the crypto industry recently. The SEC, along with Prometheum’s co-CEO Aaron Kaplan, argue that this license substantiates their belief that no additional regulations or laws are necessary for digital assets, encompassing bitcoin, ether, and numerous other tokens. This argument is particularly relevant as Congress grapples with bills aiming to provide clarity to the digital assets industry’s regulatory landscape.
However, the lack of tokens listed by Prometheum, despite holding a license to operate an alternative trading system (ATS) capable of trading digital asset securities, raises eyebrows. Rodrigo Seira, a lawyer at crypto venture firm Paradigm Capital, commented on the irony of this situation, saying that Kaplan
“has a license, but he hasn’t got a business.”
This SEC scrutiny comes on the heels of Senator Tommy Tuberville and five other congressional Republicans’ request to investigate Prometheum’s alleged connections to Chinese entities, Shanghai Wanxiang Blockchain Inc. and HashKey. However, thus far, no solid evidence of any wrongdoing has been produced. The industry and its stakeholders remain in suspense, awaiting definitive answers.
