U.S. Senator Tuberville Asks DOJ, SEC to Investigate Crypto Broker Prometheum

U.S. Senator Thomas Tuberville (R-Ala.) wrote an open letter on Monday to Attorney General Merrick Garland and Securities and Exchange Commission (SEC) Chair Gary Gensler asking them to investigate Prometheum, a special-purpose broker that recently secured federal permissions to offer crypto trading services.

Prometheum “may have provided false testimony to Congress or violated U.S. securities laws,” the open letter began. The lawmaker said Prometheum CEO Aaron Kaplan told Congress that it developed its own blockchain platform independently starting in December 2019. However, in SEC filings filed through 2021, Prometheum said it depended on Shanghai Wanxiang Blockchain, Inc., a Chinese firm Tuberville alleged had ties to the Chinese Communist Party.

“If Prometheum began developing its own technology platform totally independent of its China-based, CCP-tied partners in December 2019 as Mr. Kaplan attempted to lead Congress to believe in his congressional testimony, why was this not made clear in Prometheum’s SEC filings?” the letter said. “Why would Prometheum continue to assert in SEC filings through 2020 and well into 2021 that it was continuing development efforts with its partners Wanxiang and [Wanxiang subsidiary] Hashkey?”

It’s not the first time Tuberville has made these allegations. The lawmaker previously wrote an opinion piece for the Wall Street Journal alleging that Prometheum’s ties to Wanxiang and its broker approval “could present threats to the data security and privacy of American investors.”

Kaplan has previously said that while Wanxiang has a 20% stake in Prometheum, it has no access to the firm’s data and technology, and that the SEC has investigated this relationship.

The company has also faced heavy criticism from the crypto industry, with participants arguing that Prometheum’s proposed model for trading crypto assets as securities cannot work.

Congressmen Blaine Luetkemeyer (R-Mo.), Barry Loudermilk (R-Ga.), Ralph Norman (R-S.C.), Byron Donalds (R-Fla.) and Mark Alford (R-Mo.) also signed the letter.