Earlier this week, US senator Thomas Tuberville (R-Ala.) and five other congressional Republicans called for investigations into Prometheum’s ties to Chinese entities, alleging connections with the Chinese Communist Party.
US Congressman Ritchie Torres (D-N.Y.) has called for two independent investigations into the US Securities and Exchange Commission’s (SEC) actions, citing concerns over its handling of digital assets. In letters shared on Twitter on June 13, Rep. Torres expressed dissatisfaction with the SEC’s “haphazard and heavy-handed approach” to regulating the crypto industry.
The two letters were addressed to the SEC’s Inspector General Deborah Jeffrey and the Comptroller General Gene Dodaro of the Government Accountability Office, respectively, seeking an objective assessment of the SEC’s enforcement actions and processes to ensure greater transparency and accountability within the federal regulatory body.
The first investigation requested by the congressman was focused on the SEC’s decision to grant a special purpose broker-dealer (SPBD) license to Prometheum, a crypto brokerage company that, according to Torres, does not engage in any trading of digital assets.
In March, the company announced that it had received federal approval from the Financial Industry Regulatory Authority (FINRA) to legally offer digital asset services to residents of the United States. However, the license, or “sweetheart deal” as it was referred to, has stirred controversy within the crypto industry, with some arguing that it undermines the need for additional regulations. In contrast, others like Torres question the platform’s actual business activities.
Prometheum’s License Approval Could be Politically Motivated
Earlier this week, US senator Thomas Tuberville (R-Ala.) and five other congressional Republicans called for investigations into Prometheum’s ties to Chinese entities, alleging connections with the Chinese Communist Party. Similarly, the Blockchain Association, an industry trade group based in the US, also called for an investigation into the company.
Joining these groups, Torres has questioned the circumstances surrounding the issuance of the Prometheum’s license, suggesting that it may have been a politically motivated move by SEC Chair Gary Gensler rather than a genuine effort to incorporate digital assets into the existing regulatory framework.
The US congressman criticized Prometheum as a “deceptive digital asset platform” and compared it to Potemkin villages, which were elaborate facades created to deceive observers. He suggested that the company’s licensing reflects a trend of politicizing the registration process within the SEC, an approach rarely seen before.
Overzealous Traffic Agent
In his second letter, Rep. Torres requested an investigation into the financial regulator regarding its failure to establish a robust and practical registration process for companies offering crypto services.
He argued that the SEC’s current approach leads to uncertainty and inconsistency, likening the agency to an “overzealous traffic agent” who issues arbitrary speeding tickets without clearly defining the speed limit. Torres emphasized that regulation through enforcement is not an effective or reliable way to regulate the digital assets industry.
According to Torres, the financial watchdog has failed to provide clear guidelines regarding implementing securities laws in relation to digital assets.
“The SEC refuses to bring even the barest amount of clarity to applying securities law to digital assets. Its preferred means of communication is neither rule nor guidance but enforcement,” said the congressman.
The call for investigations comes during intense debate and legislative efforts to clarify the regulatory landscape for digital assets in Congress. The congressman has previously commended the SEC after it sued crypto exchanges Binance and Coinbase within 24 hours for violations of US laws. According to him, the Commission finally took action after sitting on the sidelines.
Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
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