Congressman Ritchie Torres has demanded an investigation into the United States Securities Exchange Commission (SEC) over its handling of digital assets, specifically focusing on its “sweetheart deal” with the crypto platform Prometheum. In letters addressed to the SEC’s Inspector General Deborah Jeffrey and the Government Accountability Office’s Comptroller General Gene Dodaro, Congressman Torres expressed concerns about the SEC’s “haphazard and heavy-handed approach to digital assets.” He criticized the SEC for failing to provide clarity in applying securities laws to digital assets and relying on enforcement rather than clear guidelines.
The congressman highlighted the SEC’s decision in May to grant Prometheum, a digital assets platform established by two American financial attorneys in 2017, a special broker purpose dealer (SPBD) license. According to Torres, Prometheum may not be a genuine trading platform for crypto customers but rather a superficial platform created to serve as a talking point for critics of cryptocurrencies. He called for an investigation into both the SEC’s failure to establish a practical registration process for digital assets platforms and the alleged backdoor deal with Prometheum.
Prometheum itself has faced increased scrutiny recently, starting with the congressional testimony of its co-founder, Aaron Kaplan, in June. Kaplan’s support of the SEC’s regulatory strategy under existing securities laws drew attention and speculation, including rumors of potential ties to Chinese investors. Following the hearing, the Blockchain Association requested information from the SEC regarding Prometheum, and in July, six Republican Congressmen urged the SEC to investigate the company’s alleged connections to the Chinese Communist Party.
This call for investigation comes amidst ongoing debates surrounding government regulation of cryptocurrencies and the need for clearer guidelines to foster innovation while protecting investors. The actions of the SEC and its dealings with Prometheum have ignited concerns among lawmakers, emphasizing the importance of congressional oversight in shaping effective regulatory frameworks for the evolving digital asset landscape.
Summary
Congressman Torres has demanded an investigation into the SEC’s approach to digital assets and its special agreement with Prometheum. The congressman seeks greater clarity in securities laws applied to digital assets and transparency in the SEC’s dealings with crypto platforms. The request for investigation reflects the ongoing discussions around cryptocurrency regulation and the need for effective oversight to balance innovation and investor protection.