The SEC Sides with Cobra Kai
Just How Broken Is Gary Gensler's Brain and Where Do His Intentions Lie?
A few weeks ago, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) issued its first crypto asset securities broker-dealer license.
Prometheum Ember Capital was the recipient of the license.
Oh, you’re in the crypto space haven’t heard of Prometheum Ember Capital?
Yeah, neither had I until I heard the co-CEO of the company interviewed on Laura’s Shin’s Unchained podcast two weeks ago.
Dude sounded TOTALLY WHACK.
So, when the name Prometheum came up again today as I was listening to an episode of On The Brink with Castle Island (Nic Carter’s podcast), I was prompted to google the Unchained interview. What came up was a YouTube version of it.
Here’s what the co-CEO of Prometheum, Aaron Kaplan looks like:
Dude resembles Terry Silver, the evil, ill-intentioned Cobra Kai instructor from the Karate Kid III (and Cobra Kai, the Netflix show).
And guess what? Kaplan may be just as evil in real life as Terry Silver was in fake movie/TV life.
Let me explain.
In an op-ed entitled “‘Crypto Communism’ Has a New Meaning”, published in The Wall Street Journal last Wednesday, June 7, U.S. Senator Tommy Tuberville pointed out that Prometheum is an American company that is “strategic partners and joint venturers” with Shanghai Wanxiang Blockchain Inc., according to its SEC filings.
The article states that Shanghai Wanxiang Blockchain Inc. is a spinoff of Wanxiang Group, which has deep ties to the Chinese Communist Party (CCP).
Tuberville explains:
“Wanxiang Group was founded in 1969 by Lu Guanqiu, a former senior Communist Party official” and how “in 2021 the party’s Central Committee posthumously named him a ‘National Excellent Communist Party Member.’”
Tuberville continues:
“Wanxiang Group is now led by Lu Guanqiu’s son, Lu Weiding. The same Communist Party press release expressed confidence that Wanxiang Group’s current leadership ‘will carry forward and practice the Lu Guanqiu spirit, always listen to the Party and follow the Party.’
Public documents submitted to the SEC show Shanghai Wanxiang Blockchain has a ‘Technology Agreement’ with Prometheum and is ‘committed and will facilitate, develop and advance Prometheum’s Ecosystem.’ The filings reveal that Prometheum will ‘obtain . . . without limitation, Wanxiang’s technology resources, industry contacts, intellectual capital, and community building mechanisms.’”
So, just in case you haven’t figured out why this is so problematic on your own, Tuberville spells it out for you:
“Prometheum’s new designation could present threats to the data security and privacy of American investors. Prometheum collects and stores personally identifiable information from its users. This could give Beijing unprecedented access to the Social Security numbers, mailing addresses and sensitive financial account data of every American who does business with the company. Where is this data being stored? If the data is being stored in China—or if Chinese technology is being used by Prometheum—what safeguards are in place to ensure the CCP doesn’t have access to this information?
The SEC and Finra should realize that companies based in China ultimately answer to the Communist Party. Companies like Wanxiang Group are essentially party property. Beijing’s data-collection practices are well documented and used to oppress political dissenters and religious minorities.”
And so we have the SEC giving the equivalent of Cobra Kai’s Terry Silver crypto security licenses, while we simultaneously have Coinbase, a perfectly good US-based, publicly-traded crypto company that has repeatedly asked for guidance and support from the SEC not only not getting licenses from the SEC, but getting charges filed against them.
Someone please explain to me how this is real life.
What is Gary Gensler thinking? Has this man completely lost his mind? Is he looking to curry favor with the CCP?
Personally, I’m chalking this one up to bureaucratic ineptitude. Maybe it’s something more malicious, but I’d prefer to believe it’s not.
Regardless, we still have the SEC granting licenses to some pony-tailed dude who’s at best completely out of step with Bitcoin/crypto culture and who’s at worst playing a part in strengthening China’s ability to surveil US financial market participants, all while decent actors in the space are being punished.
We’re really going to need Brian Armstrong, CEO of Coinbase, to summon his inner Daniel-san if Coinbase has to take on the SEC in court, because we’ve got an unelected bureaucrat run wild with Gensler, licensing problematic, potentially malicious characters out there.
Best,
Frank
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