U.S. Senator Tommy Tuberville of Alabama and Congressman Blaine Luetkemeyer have taken steps to request an investigation into Prometheum, Inc. by urging Attorney General Merrick Garland and Securities and Exchange Commission (SEC) Chair Gary Gensler to look into allegations of false testimony to Congress and potential violations of U.S. securities laws. In a letter dated July 10, 2023, Tuberville and Luetkemeyer expressed their concerns regarding discrepancies in statements made by Prometheum, a digital asset company, during its testimony before Congress and in its SEC filings. The legislators specifically highlighted the testimony of Aaron Kaplan, Co-CEO and founder of Prometheum, who claimed that the company began independent development of its technology platform in December 2019, separate from its China-based partners. However, Tuberville and Luetkemeyer argue that this claim contradicts information found in Prometheum’s financial statements and SEC filings.
The letter mentioned that Prometheum continued to rely on its partnership with Shanghai Wanxiang Blockchain, Inc. (Wanxiang) and its subsidiary HashKey Digital Asset Group, Ltd., both Chinese entities with ties to the Chinese Communist Party, well after Kaplan stated that the company had started independent operations. The lawmakers emphasized that Prometheum’s audited financial statements and SEC filings from 2020 and 2021, which were trusted by investors, indicated that the company continued to depend on its partnership with Wanxiang and HashKey even after December 2019. This contradiction between Kaplan’s testimony and the official filings raised suspicions.
Tuberville and Luetkemeyer highlighted the fact that Prometheum emphasized its relationship with Wanxiang in its SEC filings and public appearances, potentially misleading investors into believing that the partnership was ongoing and beneficial. They argue that Kaplan’s testimony before Congress seems to conflict with the information presented in these filings. The lawmakers stressed that making false statements to Congress is considered a crime, and submitting false or misleading statements in SEC filings is classified as securities fraud. Therefore, they urged a thorough review of Prometheum’s statements, its continued membership in the Financial Industry Regulatory Authority (FINRA), and its registration with the SEC.
Prometheum, a New York-based company, recently made history by becoming 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 achievement is significant for the crypto industry as it opens up possibilities for other crypto companies seeking regulatory approval 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 about its operations and intentions.
In summary, U.S. Senator Tommy Tuberville and Congressman Blaine Luetkemeyer have called for an investigation into Prometheum, Inc. The lawmakers expressed concerns about inconsistencies between the company’s testimony before Congress and its SEC filings. They emphasized that Prometheum’s reliance on its China-based partners, despite claims of independent operations, raises doubts about the accuracy of the company’s statements. Tuberville and Luetkemeyer emphasized the seriousness of making false statements to Congress and submitting misleading filings, urging a thorough examination of Prometheum’s statements and its compliance with regulatory bodies. The scrutiny faced by Prometheum after its registration with the SEC and FINRA highlights the need for transparency and accountability in the crypto industry.