Hoooooo baby this Prometheum story gets even better.

So they started in 2017 when they filled their Reg A+ and aimed to raise $50M.

But how did these random lawyers supposedly get approval from the SEC and FINRA? Image

Look no further than their team, including Rosemarie Fanelli, who worked for the NYSE and then FINRA Image

John Tornatore from CBOE Image

Or CCO Joseph Zangri from - yup, the SEC Image

-Around since 2017
-Did a Reg A+ filing to issue a token in 2017.
-Have not launched their product since 2017.
-Have a bunch of former SEC and FINRA staff
-Suddenly appear at a hearing parroting political talking points favoring the SEC. Image

They've scrubbed their social media from prior to 2019 which is when they got their current domain on the .com - the previous .info site is still on wayback machine.

On that site they said their genesis block would be 2019... Image

If you search year by year through Google, you'll notice lots of noise about them in 2017 and 2018.

Then nothing for a while, until the end of 2020 early 2021 where they claim to be SEC regulated and raise $15M Image

That means it got its approval under Jay Clayton and not the current administration.

It leaned on this commission statement of allowing broker-dealers to hold custody digital assets. Image

But even to date, it acknowledges it can't clear or settle transactions and therefore, even though it is registered it cannot operate.

This is from a Bloomberg piece on them: Image

Then they go silent again for a few years.

Until suddenly, in late '21 to early '22 they hire former FINRA and SEC staff (still with no clear product)

After which they suddenly get the approvals they've wanted.

Still with no operation. Image

Now layer this all on with the fact:

-Their fundraise was with Wanxiang a purported CCP affiliate.
-They raised $48M without a product.
-Hired former SEC and FINRA people
-Pay $1.5M to Network 1 Financial Securities Image

Who is Network 1 Financial?

A shady broker with a Chinese affiliated firm and a horrible compliance track record of more than 20 regulatory or civil actions against them.

(h/t @MattWalshInBos) ImageImage

But it gets better - that broker was the one behind the Ice Tea company that pivoted to a blockchain project in 2017 as a scam.

As well as another offering that was a blockchain pivot that the SEC charged for fraud. (h/t @collins_belton) ImageImage

In 2022 again, mostly quiet, until they announce they've "launched their ATS"

They claim that their ATS supports digital asset securities including:

"Flow, Filecoin, The Graph, Compound and Celo"

Of course, since none of these are securities they can't have... ImageImage

So they claim this ATS has existed for well over a year and that it is integrated with "Anchorage Digital Bank" (hey @Anchorage - any comment?)

But no one has heard of it, and it is supposedly now clearing regular crypto assets via an ATS? Image

But that statement where they claimed to be offering those tokens was in 22.

The Bloomberg article from earlier where they said they don't have an offering, can't clear and settle and *hope* to list assets in the future...was from May 2023... Image

So if they launched their ATS in 2022, why, in 2023 are they talking about intent to launch and their hands being tied?

Why are they suddenly showing up as a Congressional Witness?

Why are the tokens they listed in '22 (Filecoin, Flow, et al) many of the same tokens that the SEC has now first listed in their actions against Coinbase and Binance?

There are three possible answers:

1) These are plants who are being given a sweet regulatory deal in exchange for engaging in the way the SEC wanted to (just like Gary was working on with SBF)

2) These guys are using their SEC and FINRA connections to push an agenda to get certain assets deemed securities and for them to be the only approved player to capture the market.

3) These guys are grifters who raised a ton of money from sketchy sources and for years have been twisting worst and progress to continue to ride the grift.

I don't know which one it is, but something is rotten here.

With all the efforts Coinbase, Kraken and other reputable firms have put into putting their best foot forward - it is impossible to believe this sketchy agency got the green light.

Even a cursory glance shows that this is not someone you should greenlight, especially not as the first in the space.

Plants, patsies, or opportunists - its unclear, but the fact Gensler is letting them run around with SEC approval is a red flag.
After writing this all out - I feel as if Elizabeth Warren is about to personally kick down my front door, drag me off to some blacksite where they keep the aliens, and waterboard me for unearthing her plants or something...

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More from @adamscochran

Jun 13

SEC Hinman email release summary:

-Not a big impact to the $XRP case.
-Decently positive for $ETH.
-Nuance puts Gensler in a corner.

Let's recap the Hinman speech and I'll explain why this is damning for Gensler's position!

"But Adam! This is old and was when ETH was PoW!!!!"

We'll get to that - but, remember, this is still important because it was the last time the SEC made any material effort to clarify security regulations in their relation to digital assets.

Hinman's guidance in his speech certainly went beyond the scope of Howey by attempting to understand the nuanced intent of users vs investors - as well as trying to ask the question of 'morphing' this concept of can something be a security and then later not a security.
Read 25 tweets
Jun 8

My hunch is that Coinbase will have to settle some of the early staking product stuff that wasn’t positioned perfectly and pay a fine.

They’ll then need to stand ground on assets not being securities and wallet not being a broker-dealer.

SEC is hoping those two parts get overlooked to create a soft precedent for the rest of the industry.

Because the SEC does not have a strong case these assets are securities and hence hasn’t gone after them directly.

It’s the same reason they waited to flesh out the fraud charges against Binance and crammed in the securities asset cases around it.

You need to parse the two separately and it’s ok for them to have different conclusions.
Read 9 tweets
Jun 7

Evidence from SEC case against Binance including internal chat logs, first between Sam Lin (former compliance lead at Binance) and Alivn (previously head of BD)

First is their convo about equity bonuses where Sam talks about risks of holding BNB Image

Specifically tells Alvin to take his BNB bonus and dump it into USDT as it'd be dumb to hold. Image

Talks about how the compliance side is a sinking ship like titanic. Image
Read 15 tweets
Jun 6

Breakdown of the SEC Coinbase complaint:

Advocates that since 2019 it's been an unregistered broker (odd year to pick?)

What changed in 2019 versus prior years?

Also claims its a clearing agency - which is a stretch here. Image

Unregistered broker claim for Coinbase prime as a 'prime broker for digital assets' - still a weak-ish claim but the naming convention hurts them.

Claiming Coinbase Wallet (which is non-custodial) is a broker because users can use defi, is insane and new. Image

Wildly claims Coinbase made the 'calculated business decision' to ignore the law.

Which given the public documentation of asking for guidance is laughable. Image
Read 20 tweets
Jun 5
This is also a good time to remind you to get your assets off Binance and into a wallet you own.

They claim to be backed 1:1 so there should never be a "bank run" issue here.

People learned the hard way with FTX about being too trusting.

You don't owe an exchange loyalty.
They SEC complaint claims Binance used user funds, sent it to entities controlled by CZ and did trades with it.

Meaning you have no idea if your assets are truly backed.

If you shout "4" at that - then you don't get to cry if your assets ever disappear.
Read 4 tweets
Jun 5

Breakdown of SEC filing against Binance/CZ

Covers Binance, Binance US, CZ and all his entities. Image

Claims was aware of the rules and avoided registration.

This is one that is debatable because of the rule clusterfuck that the US is. Image

Calls out BNB, simple earn, and BNB Vault on the US platform as investment schemes.

That will be a slam dunk for them.

Tries to lump in BUSD in there - which is a snake move. Doubt that one sticks. Image
Read 14 tweets

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