SEC like ‘overzealous traffic cop’: Torres calls for Prometheum probe

Representative accuses Gensler of “politicizing” the registration process by approving Prometheum’s special purpose broker-dealer license


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Representative Ritchie Torres, D-N.Y., has asked the SEC to open an investigation into how and why crypto exchange Prometheum was able to receive a first-of-its-kind special purpose broker-dealer (SPBD) license. 

In a letter addressed to SEC Inspector General Deborah Jeffrey, Torres asked the agency to look into the “unusual backroom deal” that resulted in Prometheum being granted a privilege no other crypto exchange has yet to secure. 

“Prometheum appears to be nothing more than a Potemkin platform, operating as a timely talking point for crypto critics rather than a true trading platform for crypto customers,” Torres wrote in the letter. “The dubious decision to license a deceptive digital assets platform reflects the latest attempt by Chair Gary Gensler to politicize the registration process to an extent seldom seen in the SEC’s history.” 

By approving Prometheum’s SPBD license, the SEC is once again acting arbitrarily with its approach to crypto regulation, Torres argued. 

“[The SEC] is acting like an overzealous traffic cop arbitrarily ticketing drivers while keeping the speed limit a secret,” Torres wrote in a tweet Thursday. “It prefers to communicate by enforcement rather than by rules or guidance. But that’s no way to regulate digital assets.” 

The letter comes one day after crypto advocacy firm Blockchain Association sent a similar letter to Jeffrey in regards to Prometheum. The Blockchain Association alleges that Prometheum received a deal from the SEC in exchange for shifting the tone of their public dialogue about the agency from negative to positive. 

“We are concerned that Chair Gensler is using Prometheum and the SPBD licensure process as a means to thwart congressional efforts toward legislation by continuing to spread the false narrative that the law is already clear with regard to digital asset securities,” the Blockchain Association’s letter added. 

Torres’ criticism of the SEC and its SPBD approval process also comes alongside public outrage from his Republican colleagues

On Monday, six Republican senators sent a letter to the Department of Justice and the SEC, asking the agencies to look into Prometheum’s alleged ties with China. The group also claims that Aaron Kaplan, CEO of Prometheum, may have violated securities laws and provided false testimony when he appeared before lawmakers on the Hill last month. 

“An independent review of the SEC’s haphazard and heavy-handed approach to digital assets is urgently needed,” Torres added in the letter.

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