SEC’s encryption regulation B-side: The Fantastic Story of Prometheus Exchange

SEC's encryption regulation and the story of Prometheus Exchange

Author: NingNing, independent analyst. Source: Author’s Twitter NingNing @0xNing0x

A cryptocurrency exchange incubated by Chinese capital (Wanxiang Blockchain, Hashkey); an exchange whose core team members are mainly former employees of SEC and FINRA; a shell exchange that has had no actual business operations since its establishment in 2017 – it is the Prometheus Exchange.

However, it has ambitions to monopolize cryptocurrency trading in the United States and has caused a big stir in the U.S. cryptocurrency circle these days.

Here’s what happened: Recently, the SEC launched a new round of intensive regulatory actions against the cryptocurrency industry in the name of protecting investors, including suing Binance and Coinbase and defining tokens such as $SOL, $MATIC, and $ADA as securities. But at this moment, the CEO of Prometheus Exchange, Aron Kaplan, appeared in a congressional hearing on the cryptocurrency industry with a pre-prepared cheat sheet, answering questions from Democratic lawmakers and putting on a good show. Their goal was to try to convince members of Congress and the public that tokens defined by the SEC as securities should only be traded on licensed and compliant securities-type token exchanges (ATS), which currently means they can only be traded on the Prometheus Exchange.

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This makes the SEC’s regulatory actions look a bit suspect: from a righteous act to protect cryptocurrency investors, it seems more like clearing out competitors for the Prometheus Exchange and engaging in interest transfers. As a result, a “scraping movement” against the Prometheus Exchange has erupted in the U.S. cryptocurrency circle these days. Only when you scrape do you know, and when you scrape, you get scared. The black materials of the Prometheus Exchange mentioned at the beginning have been exposed one after another.

However, the Prometheus Exchange has ignored the criticism from the U.S. cryptocurrency circle and only tweeted on June 13 as a side response. The tweet said: “There is a path forward for U.S. digital assets, which is to use the existing regulatory framework established by the U.S. Federal Securities Act.”

To translate it: Don’t expect to enact new laws specifically for digital assets/cryptocurrencies. Learn from me and apply for compliance licenses from SEC and FINRA. Of course, you won’t get the license.

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