How Prometheum Became The Most Hated Company In Crypto

Prometheum has angered nearly everyone in the crypto community, not merely due to their existence, but because of their approach to the industry. While other crypto firms are struggling to navigate tightening regulations, Prometheum has been aligning closely with regulators, causing controversy.

Why is it so despised?

The company began attracting negative attention in May 2023 when it became the first to obtain a special-purpose broker-dealer license by the SEC and FINRA. This license enables them to manage digital assets, a capability that major players like Coinbase and Robinhood have been striving to obtain for years without success. Unsurprisingly, the crypto community reacted negatively to this development.

The Blockchain Association criticized it as a sweetheart deal, and some Republican Congress members even called for a DOJ investigation to uncover how Prometheum achieved this. The situation was further aggravated because Coinbase and Robinhood had been repeatedly denied this license. Prometheum asserts they simply adhered to regulations, but many are skeptical.

Reading Between The Lines

Beyond acquiring the contentious license, Prometheum went on to classify major tokens such as ETH, UNI, and ARB as securities on their platform. This decision sparked outrage because the SEC has not yet clarified the status of Ethereum as a security. By labeling ETH, UNI, and ARB as securities, Prometheum appeared to overstep.

Critics noted the inconsistency, questioning how Prometheum could designate these tokens as securities when the SEC itself has yet to provide clarification. Despite the backlash, the company remained resolute. Ben Kaplan, CEO of Prometheum Capital, the subsidiary with the broker-dealer license, stated that their aim is to integrate the top 50 digital assets into the platform, and that Uniswap and Arbitrum are among them.

The timing is also noteworthy. As the SEC aggressively pursued legal action against various companies for selling unregistered securities, Prometheum managed to launch its services. Following Aaron Kaplan, Prometheum CEO, testifying before Congress, questions about who the early financial backers for the company, including a Chinese crypto firm, and its profitability have intensified.