The United States crypto community was greatly surprised after a largely unknown crypto exchange rose to prominence over the past week. Before the exchange’s recent rise to fame, its founder had testified at a House hearing and lent their support to the Securities and Exchange Commission’s (SEC) enforcement actions.
Accordingly, Blockchain Association, a lobby group, has written to the SEC seeking more information about the previously unknown crypto entity, Prometheum.
Supporting The SEC
This week, the crypto industry’s attention was on Prometheus after its founder, Aaron Kaplan, spoke during a recent US Congress hearing. In a surprising move, Kaplan expressed his firm support for the SEC for subjecting crypto assets to securities laws and the enforcement approach of the regulator.
His stance is a sharp contrast to many crypto industry players. Meanwhile, Marissa Coppel, legal counsel for the Blockchain Association, revealed that the organization had submitted a Freedom of Information Act (FOIA) request to the securities regulator.
The association wants comprehensive details relating to the approval of Prometheum as a player in the digital asset ecosystem. Coppel expressed her suspicions in a series of tweets where she questioned the approval of Prometheum as a special purpose broker-dealer (SPBD) for digital assets when the SEC was actively enforcing regulations.
It is worth noting that the FOIA demands are legal. They are requests from public members to federal agencies in the United States regarding information they need on any topic.
In this case, the crypto lobby group requests information from the SEC about Prometheum. During the hearing, Kaplan was interviewed by Congressman Mike Flood about his firm’s relationship with the regulator.
In response, Kaplan disclosed that Prometheum received no “exemptive relief” from the commission.
The Promethuem Mystery
Members of the crypto community raised their concerns regarding the Prometheum team after reports surfaced that a few members previously had stints with the SEC and the Financial Industry Regulatory Authority (FINRA) in official capacities.
For instance, Joseph Zangri, the chief compliance officer at Prometheum, reportedly served as an SEC enforcement attorney during the late 1990s.
Likewise, Rosemarie Fanelli, the chief regulatory officer, recently joined the company following a distinguished career of nearly 14 years as a senior executive at FINRA—an independent organization responsible for regulating the securities industry in the US. Furthermore, the co-founders and CEOs of Prometheum, Benjamin and Aaron Kaplan, have a connection to an unnamed former SEC personnel.
These two attorneys work with Gusrae Kaplan, a law firm reportedly founded by a former “Chief Attorney of the SEC’s Division of Enforcement.” Surprisingly, Prometheum also has Martin H. Kaplan, one of the co-founders of Gusrae Kaplan, as its chairman.
While it may seem strange, it is not uncommon for cryptocurrency companies to enlist the services of former regulatory personnel. Earlier, Binance.US made headlines when they appointed George Canellos, a former co-director of SEC enforcement, as their legal counsel in response to a lawsuit filed by the commission.
Similarly, Circle, the USDC stablecoin issuer, appointed a chief legal officer with extensive experience serving in various governmental positions, including roles in the US Treasury and the Commodity Futures Trading Commission (CFTC).