- Prometheum is facing investigations from the DOJ and SEC following allegations of undisclosed ties to Chinese entities.
- Co-CEO of Prometheum, Aaron Kaplan, testified that the company severed its technology development partnership with Chinese entities Wanxiang Blockchain and HashKey in December 2019.
- This inconsistency between Kaplan’s testimony and Prometheum’s SEC filings has raised concerns about potential violations of U.S. securities laws.
Prometheum, Inc., the trailblazing cryptocurrency firm that recently received landmark approval from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), finds itself ensnared in a maelstrom of political scrutiny. In a twist of irony, the would-be SEC darling, once poised to become a pioneer in digital asset securities, now faces allegations concerning its opaque ties to China.
A Murky Trail to the East: Prometheum’s Ties with Chinese Entities
U.S. Senator Tommy Tuberville has led a clarion call for the Department of Justice (DOJ) and the SEC to investigate Prometheum’s relationships with Chinese companies Wanxiang Blockchain and its affiliate HashKey. These entities are alleged to have substantial connections with the Chinese Communist Party (CCP).
Prometheum’s co-CEO, Aaron Kaplan, testified before the House Financial Services Committee last month, in a hearing regarding the future of digital assets. The hearing was intended to hold up Prometheum as an example of responsible digital asset industry participation. However, unknown to most of the Congress members at the time of invitation, Prometheum’s largest outside investor was a Chinese company with deep ties to the CCP. The revelation brought forth concerns about possible breaches in data security, considering that any part of Prometheum’s platform built by Chinese entities could potentially jeopardize the confidential data of American users.
During his testimony, Kaplan stated that Prometheum ended joint development of its blockchain trading system with its Chinese partners in December 2019, and initiated development of an independent platform. The issue, however, is the apparent incongruence between his testimony and the documented evidence in the company’s financial statements and SEC filings.
Inconsistencies in Testimonies and Documents: A Cause for Concern
Senator Tuberville and fellow Congressional members noted that Prometheum’s financial statements and SEC filings throughout 2020 and most of 2021, over a year after December 2019, indicated a continued reliance on its partnership with Wanxiang and HashKey for technology buildout. These documents included explicit statements about the company’s dependency on Wanxiang for its platform development.
The concerns escalate when comparing Kaplan’s testimonial timeline and the actual end of Prometheum’s formal tech-sharing agreement with Wanxiang and HashKey, which was not terminated until October 2021. This apparent contradiction brings to light crucial questions about the accuracy of Kaplan’s statements to Congress and the reliability of Prometheum’s SEC filings.
A Call to Action: The Urgency for Transparency and Accountability
In light of these inconsistencies, Senator Tuberville has forwarded a letter to the Attorney General and SEC Chair, calling for an investigation into Prometheum’s ties with China and a thorough review of the company’s SEC filings and statements to Congress.
As the Prometheum incident underscores, the sector must foster a culture of openness, not only to ensure investor trust but also to maintain its own credibility in the broader financial ecosystem. The outcome of this investigation could signal a critical moment for crypto-industry regulation, and thus warrants close attention in the coming months.
