Republicans call on DOJ, SEC to investigate Prometheum, alleging China ties
Four Republican members of Congress said Prometheum “may” have misled Congress or “violated U.S. securities laws”
US Senator Tommy Tuberville | lev radin/Shutterstock modified by Blockworks
A group of Republican congressional members on Monday asked the Department of Justice and the SEC to investigate Prometheum, a crypto company that has come under increased industry scrutiny in recent weeks.
Lawmakers also tapped the Financial Industry Regulatory Authority (FINRA) to investigate Prometheum’s membership.
The group claims that Aaron Kaplan, CEO of Promethuem, may have violated securities laws and provided false testimony when he appeared before lawmakers on the Hill last month.
On June 13, while serving as a congressional witness, Kaplan told the Committee on Financial Services that Promethuem “started to independently develop its own platform,” after failing to develop a blockchain trading system with Hashkey’s Wanxiang Blockchain.
The letter was signed by Sens. Tommy Tuberville, R-Ala., Blaine Luetkemeyer, R-Miss., Barry Loudermilk, R-Ga., Ralph Norman, R-S.C., Byron Donalds, R-Flor., and Mark Alford, R-Missouri.
But lawmakers said the statement — which they interpreted to mean Prometheum was developing the platform without China-based partners — still relied on the Hashkey partnership, according to SEC filings from 2020 and 2021.
In the letter, lawmakers questioned why Prometheum in those filings “not made clear” that the company was “developing its own technology platform totally independent of its China-based, XCCP-tied partners in December 2019 as Mr. Kaplan attempted to lead Congress to believe in his congressional testimony.”
Added the letter: “Why would Prometheum continue to assert in filings through 2020 and well into 2021 that it was continuing development efforts with its partners Wanxiang and Hashkey?”
The letter comes roughly a month after Tuberville introduced a bill to ban companies established in China from acquiring a stake in American digital asset firms. The legislation was co-sponsored by Sen. Kristen Gillibrand, D-N.Y., who has spearheaded several efforts to establish broader crypto regulation in the US.
The bill, which would amend the Commodity Exchange Act, would prohibit the CFTC from greenlighting any American-based crypto firm that is “owned in whole or in part by an entity organized or established in the [People’s Republic of China].”
The senators did not give the DOJ and SEC a deadline to respond, saying they “look forward” to hearing the regulators’ replies.
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