U.S. Senator Tommy Tuberville of Alabama and Congressman Blaine Luetkemeyer have raised concerns regarding Prometheum, Inc., a digital asset company, alleging false testimony and potential violations of U.S. securities laws. The legislators have called on Attorney General Merrick Garland and Securities and Exchange Commission (SEC) Chair Gary Gensler to conduct a thorough investigation into the matter.
The Discrepancies
In their letter dated July 10, 2023, Tuberville and Luetkemeyer highlighted discrepancies in Prometheum’s statements made before Congress and its SEC filings. Aaron Kaplan, Co-CEO and founder of Prometheum, testified that the company began independent development of its technology platform in December 2019, separate from its China-based partners. However, the legislators argue that Prometheum’s financial statements and SEC filings indicate a continued reliance on its partnership with China-based entities, Shanghai Wanxiang Blockchain, Inc. (Wanxiang), and its subsidiary HashKey Digital Asset Group, Ltd., even after Kaplan claimed independent operations.
Tuberville and Luetkemeyer expressed concerns that Prometheum’s emphasis on its relationship with Wanxiang in its SEC filings and public appearances may have misled investors into believing that the partnership was ongoing and advantageous. They argue that Kaplan’s testimony to Congress appears to conflict with these filings.
The Alleged Crimes
The lawmakers have strongly emphasized that making false statements to Congress is a crime, and submitting false or misleading statements in SEC filings constitutes securities fraud. They have urged for a comprehensive review of Prometheum’s statements, its continued membership in the Financial Industry Regulatory Authority (FINRA), and its registration with the SEC.
Prometheum, based in New York, recently became the first crypto-focused company to register with the U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) as a special-purpose broker-dealer. This registration is a significant development in the crypto industry as it opens up possibilities for regulatory approval for other crypto companies interested in engaging with digital assets. However, Prometheum has faced speculation and criticism since Kaplan’s congressional testimony, as it was relatively unknown at the beginning of the year, raising questions about its ability to gain SEC approval compared to others in the industry.
The allegations against Prometheum, Inc. have prompted Senator Tuberville and Congressman Luetkemeyer to call for an investigation into the company. The concerns revolve around the potential false testimony given by Prometheum’s Co-CEO and founder before Congress, as well as inconsistencies between the company’s statements and SEC filings. The legislators stress the importance of maintaining transparency and integrity in the financial industry and urge for a thorough examination of Prometheum’s actions. The outcome of the investigation will shed light on whether there have been any violations of U.S. securities laws and the extent to which investors may have been misled.
Leave a Reply