Republicans Demand Answers From SEC’s Gensler

Check out the biggest breaking crypto market updates for today:

Chinese Filecoin Mining Firm Charged For Allegedly Orchestrating $83.3 Million Pyramid Scheme

A Chinese Filecoin mining firm and its four executives are reportedly facing a lawsuit at the People’s Court of Pingan County in China for their alleged involvement in an $83.3 million pyramid scheme. 

Prosecutors alleged that the defendants lured customers to pay fees for purchasing mining equipment or leasing mining machines under the guise of mining FIL coins using the company’s platform. The company allegedly managed to secure nearly $100 million from more than 57,000 users. 

“With the lure of substantial returns, they enticed further participation and deceived individuals to gain assets, disturbing the economic and social order,” the prosecutors said. 

They said that the company had set up platforms and built a website with the domain name to inappropriately promote its services. 

When the company was “busted” by the Chinese authorities in May 2022, it had dozens of thousands of users on its platforms and had obtained over 606.95 million yuan ($83.3 million) through the sites they created. 

A former employee of Shenzhen Shikongyun said that the company was well aware of the risks of operating on the Chinese mainland and had planned to expand overseas before the executives were arrested and brought into custody last year. 

The former employee requested anonymity due to sensitivity of the matter. 

Unlike its neighboring Hong Kong which is actively developing the crypto and Web3 industries, China banned all crypto transactions on the mainland in September 2021.

Republican Lawmakers Demand Gensler Tell Them How Prometheum Got SEC Approval

Republicans on the U.S. congressional committee are reportedly demanding Securities and Exchange Commission Chair Gary Gensler to hand over documents related to a license issued to digital asset firm Prometheum. 

The 23 House Financial Services Committee lawmakers, led by Chair Patrick McHenry (R-N.C.), have sent a signed letter that reads, 

“The timing of the approval raises concerns that it was aimed at demonstrating that legislation is not needed because there is a workable regulatory framework for the custody of digital asset securities” adding “While prometheum claims it is the silver bullet for regulated digital aset offerings, it has not yet served a single customer. It is unclear why FINRA would have chosen to approve a firm with no operating history and no track record of serving customers over all the applications that it has received.” 

The letters raise “serious questions” about whether the SEC championed Prometheum as a poster firm to represent Gensler’s position that no new laws are needed to regulate and police crypto in the U.S., just as McHenry’s committee was about to send digital assets legislation to the House floor. 

For its part, Prometheum’s executives have insisted that they’ve been going to step-by-step through the registration process like any other firm, and co-CEO Aaron Kaplan has argued that his firm will demonstrate the right way to build a crypto platform that’s compliant with current rules. 

“Prometheum purpose-built its technology with the goal to develop a market infrastructure for digital asset securities that is compliant with the federal securities laws,” the company said in a Tuesday statement in response to the lawmakers’ campaign. “This technology will serve as a building block for a compliant and orderly digital asset securities marketplace that protects investors and serves their best interests.” 

The lawmakers are just the latest to call for more information or investigations into the sudden Washington presence of Prometheum – a company that hasn’t yet done any trading. 

Other Republican members of the Senate and House have also pursued more scrutiny on the situation, and Ritchie Torres (D-N.Y.) – a Democrat on McHenry’s committee – has requested an investigation of the SEC.

Uzbekistan Permits Two Banks To Issue Crypto Cards

Uzbekistan-based private banks ‘Kapital Bank’ and ‘Ravnaq Bank’ have reportedly acquired approval from the country’s National Agency for Perspective Projects (NAPP) to participate in the digital sandbox of crypto regulation. 

The banks are reportedly planning to issue a plastic crypto card called UzNEK powered by Mastercard. 

UzNEK will integrate the user’s bank account with access to crypto exchange and automated exchange mechanism. 

The card will be supported by one of the world’s leading payment systems, Mastercard. 

The current deadline for final customer rollouts of both banks’ crypto cards is the end of December 2023. Kapital Bank and Ravanq remain two of the three registered participants in the national digital sandbox. 

From 2023, the government of Uzbekistan has restricted the provision of crypto services to licensed cryptocurrency firms. The first licenses were granted to local crypto firms in November 2022. Before that, Uzbekistan restricted access to a number of large international crypto exchanges, including Binance, FTX and Huobi, due to accusations of unlicensed activity. 

The country’s regulatory approach to crypto was initiated by a presidential decree in 2022 when the NAPP was launched to oversee the digital assets industry. The decree also provided comprehensive legal details related to cryptocurrency mining operations in Uzbekistan.

Luke Baldwin