U.S. Lawmakers Urge Investigation into Prometheum Over Alleged False Testimony and Securities Law Violations

U.S. Lawmakers Urge Investigation into Prometheum Over Alleged False Testimony and Securities Law Violations

U.S. Senator Tommy Tuberville of Alabama and Congressman Blaine Luetkemeyer have called on Attorney General Merrick Garland and SEC Chair Gary Gensler to investigate Prometheum, Inc. The lawmakers have raised concerns about potential violations of U.S. securities laws and false testimony to Congress by the digital asset company.

In a letter dated July 10, 2023, Tuberville and Luetkemeyer highlighted discrepancies in statements made by Prometheum. They specifically pointed out that Aaron Kaplan, Co-CEO and founder of Prometheum, testified before Congress that the company began independent development of its technology platform in December 2019, separate from its China-based partners. However, the lawmakers argue that this claim contradicts indications in Prometheum’s financial statements and SEC filings.

According to the letter, Prometheum continued to rely on its partnership with Shanghai Wanxiang Blockchain, Inc. (Wanxiang) and its subsidiary HashKey Digital Asset Group, Ltd. despite Kaplan’s statement about independent operations. The lawmakers emphasized that Prometheum’s audited financial statements and SEC filings from 2020 and 2021 indicate ongoing reliance on Wanxiang and HashKey.

Prometheum’s Potentially Misleading Filings and Public Appearances

Tuberville and Luetkemeyer pointed out that Prometheum emphasized its relationship with Wanxiang in its SEC filings and public appearances. This potentially misled investors into believing that the partnership was still ongoing and advantageous. The lawmakers argue that Kaplan’s testimony to Congress appears to conflict with these filings.

The legislators emphasized that making false statements to Congress is a crime, and submitting false or misleading statements in SEC filings constitutes securities fraud. They urge a thorough review of Prometheum’s statements, its continued membership in FINRA, and its registration with the SEC.

Prometheum’s Regulatory Approval Raises Questions

Prometheum, based in New York, recently made history as the first crypto-focused company to register with the SEC and FINRA as a special-purpose broker-dealer. This development is significant for the crypto industry as it opens up possible paths to regulatory approval for other crypto companies looking to engage with digital assets.

However, since Kaplan’s congressional testimony, Prometheum has faced speculation and criticism. As a relatively unknown player at the beginning of the year, its ability to gain SEC approval where others have failed has raised questions and skepticism.

Call for Investigation into Prometheum

Senator Tuberville and Congressman Luetkemeyer are urging the Attorney General and SEC Chair to thoroughly investigate Prometheum over alleged false testimony to Congress and potential violations of U.S. securities laws. They have raised concerns about discrepancies in Prometheum’s statements and its reliance on China-based partners despite claims of independent operations. The lawmakers emphasize the importance of accurate and transparent information for investors and the need to hold companies accountable for any false or misleading statements. The outcome of the investigation will shed light on the integrity of Prometheum’s operations and its compliance with securities regulations.

Regulation

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