Prometheum has managed to piss off just about everyone in the crypto community. It’s not the fact that they exist—it’s how they’re playing the game.
While most crypto companies are struggling to keep their heads above water amidst tightening regulations, Prometheum seems to be getting cozy with regulators, ruffling feathers left and right.
The company’s journey to infamy started in May 2023 when they became the first company to snag a special-purpose broker-dealer license from the SEC and FINRA.
This license allows them to custody digital assets, something major players like Coinbase and Robinhood have been trying (and failing) to get for years. The community didn’t take this news well.
The Blockchain Association called it a “sweetheart deal,” while some Republican leaders in Congress went a step further, calling for a DOJ investigation to figure out how the hell Prometheum managed to pull this off.
It doesn’t help that Coinbase and Robinhood were already jumping through hoops for this same license, only to be turned down repeatedly. But here comes Prometheum, seemingly cutting the line.
How did they do it? Prometheum claims they just played by the rules, but nobody’s buying it.
Prometheum didn’t stop at getting a controversial license. No, they went further and decided to classify some of the biggest tokens in the market—Ethereum (ETH), Uniswap’s UNI, and Arbitrum’s ARB—as securities on their platform.
This caused an uproar. Why? Because the SEC itself hasn’t even made it clear if Ethereum is a security or not. So when Prometheum decided to go ahead and label ETH, UNI, and ARB as securities, it felt like they were stepping way out of line.
Critics were quick to point out the inconsistency. “How can Prometheum call these tokens securities when the SEC hasn’t even made up its mind?” they asked.
But the company doubled down. Ben Kaplan, the CEO of Prometheum Capital, a subsidiary holding the broker-dealer license, stated that:
“Our goal is to integrate or include the top 50 digital assets into our platform, and Uniswap and Arbitrum are within about 50.”
In May, Prometheum launched its Ethereum custody services, a move that defied the industry’s general consensus. Most in the crypto industry believe that the current laws don’t quite cover digital assets properly, but Prometheum didn’t seem to care.
They went ahead and launched these services under the strict watch of the SEC, treating Ethereum like a security.
The timing was also curious. Just as the SEC was on a warpath, hitting multiple companies with lawsuits for selling unregistered securities, Prometheum somehow managed to get the green light for this launch. They said:
“We will take appropriate action if regulators later decide that something we’ve listed isn’t a security.”
Since Aaron Kaplan, Prometheum’s CEO, appeared before Congress, questions have only multiplied. People are wondering about the company’s early financial backers, particularly a Chinese crypto company, and whether the whole operation is even profitable.
In their January SEC filings, Prometheum themselves admitted to “significant losses” and added that they hadn’t even started generating revenue.
Not exactly confidence-boosting stuff, is it?