U.S. lawmakers are looking into the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) about the “shady approval” of Prometheum “as the first and only special purpose broker-dealer for digital assets.” The timing and circumstances of the approval were questioned, they said, pointing out that Prometheum had no clients and had no prior operations. The MPs also emphasized the company’s connections to the Chinese government.
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SEC, FINRA Probed Over ‘Shady Approval’ of Prometheum
The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are being investigated by the U.S. House Financial Services Committee, according to a report released on Tuesday. Republican committee members are being led by the committee’s chairman, Patrick McHenry (R-NC), regarding the “shady approval” of Prometheum.
— Heike (@HeikeMayday) August 17, 2023
The Financial Services GOP’s Twitter account said the following in reference to letters addressed by lawmakers to FINRA President and CEO Robert Cook and SEC Chair Gary Gensler on August 9:
Republicans on the Financial Services Committee, led by Chairman Patrick McHenry, wrote letters to FINRA and the SEC protesting the dubious designation of Prometheum as the sole special purpose broker-dealer for digital assets.
The letter’s co-signer, Congressman Scott Fitzgerald (R-WI), tweeted that it was troubling that SEC Chair Gensler had approved a special-purpose broker-dealer for digital assets for a firm with close ties to the Chinese Communist Party. Together with the Financial Services Committee, I demanded that this decision be made transparent.
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— Agent P (@AgentP22) August 12, 2023
The legislators requested in a letter to the SEC that the agency “provide all documents and communications, between and among SEC employees, related to or referring to Prometheum’s application to become a special purpose broker-dealer, as soon as possible but no later than 5:00 p.m., August 22, 2023.”
They continued, “The clearance comes as the Committee is thinking about filling the regulatory gaps for digital assets… The law was finally published on June 2, 2023. The approval’s timing raises suspicions that it was intended to show that legislation is not necessary because there is a functional regulatory framework for the safekeeping of digital asset securities.
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The MPs also expressed worries that Prometheum “has ties to the Chinese government,” which they perceive as seriously endangering national security and personal data. Ritchie Torres, a member of the US Congress, has previously demanded a probe of the SEC’s issuance of Prometheum with a special purpose broker-dealer license.