Waukesha Times

Wisconsin Rep. Scott Fitzgerald has voiced concerns regarding the endorsement of broker-dealer firm Prometheum Inc., citing their purported connections with the Chinese Communist Party (CCP). Fitzgerald, accompanied by a group of fellow Republican legislators, penned a letter to Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), seeking clarity on the matter.

"It’s concerning that SEC Chair Gensler’s first and only approval of a special purpose broker-dealer for digital assets was done for a company with strong ties to the CCP," Fitzgerald said. "I joined @FinancialCmte in demanding transparency around this decision."

Prometheum Inc. secured SEC registration as a specialized broker-dealer for digital assets, surpassing rival applicants. This decision has prompted inquiries from numerous lawmakers, questioning the reasons behind it, which is not a singular occurrence. Both Senate and House members have previously initiated investigations into Prometheum, as well as investigations involving the SEC itself. Prometheum has yet to engage in any trading activities, according to CoinDesk.

The letter was signed by 23 members of the House Financial Services Committee, under the leadership of Chair Patrick McHenry. These lawmakers express worries about potential national security risks and the absence of regulatory frameworks for overseeing cryptocurrency in the U.S. However, Prometheum's leadership maintains that they have participated in the registration process in the same manner as any other company. Co-CEO Aaron Kaplan claims the company will be "compliant with current rules", according to CoinDesk.

"Even more troubling, the circumstances surrounding Prometheum raise serious national security and data privacy concerns," states the letter to Gensler. "In 2018, Prometheum and Shanghai Wanxiang Blockchain Inc. (Wanxiang) entered into an agreement to jointly develop blockchain trading software. While the agreement was later terminated, and Prometheum claims all software was independently developed, the involvement of a Chinese entity in technology development in the early stages of Prometheum raises serious concerns. Furthermore, Kaplan testified before this Committee that 20% of his company is owned by this Chinese entity. According to SEC filings, a representative of that entity, Feng Ziao, serves as a Director in Prometheum. Wanxiang has deep ties to the Chinese Communist Party (CCP)."