Members of the House Financial Services Committee questioned the “timing and circumstances” of FINRA approving Prometheum’s special purpose broker-dealer license in May.
United States lawmakers on the House Financial Services Committee have demanded answers from the heads of the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regarding how Prometheum obtained a special purpose broker-dealer (SPBD) license.
In separate letters dated Aug. 9, House committee Chair Patrick McHenry and 20 other members wrote to SEC Chair Gary Gensler and FINRA president and CEO Robert Cook. The lawmakers questioned the “timing and circumstances” of FINRA approving Prometheum’s SPBD license as they were continuing to consider legislative solutions to regulatory gaps on digital assets.
“While Prometheum claims it is the silver bullet for regulated digital asset offerings, it has not yet served a single customer,” claimed the lawmakers. “It is unclear why FINRA would have chosen to approve a firm with no operating history and no track record of serving customers over all the applications that it has received.”
#NEW: Chairman @PatrickMcHenry led Republicans on the Financial Services Committee in letters to @FINRA and @SECGov regarding the shady approval of Prometheum as the only Special Purpose Broker-Dealer for digital assets.
— Financial Services GOP (@FinancialCmte) August 15, 2023
Prometheum, founded in 2017, had been largely unknown to many members of the crypto space prior to its co-founder and co-CEO Aaron Kaplan testifying before the House committee in June. The firm received an SPBD license in May, prompting many crypto advocacy groups and lawmakers to question its products and services and in some cases call for an investigation.
The House committee members requested the SEC and FINRA provide documents and communication records related to Prometheum’s SPBD license before Aug. 22. In addition, the lawmakers called on FINRA to answer specific questions related to Prometheum, alleging the firm may have had ties to the Chinese Communist Party.
In a statement to Cointelegraph, a Prometheum spokesperson said the SEC closed its investigation into the firm’s former relationship with Shanghai Wanxiang Blockchain and its alleged ties to the CCP. Kaplan previously denied similar allegations brought in July by lawmakers calling for an investigation into the firm’s activities.
Update (Aug. 15 at 9:28 PM UTC): This article has been updated to include a statement from Prometheum.