Who Will Eat Prometheum’s Liver?

Seward & Kissel LLP

Seward & Kissel LLP

According to mythology, the titan Prometheus gave humans the gift of fire. As punishment, Zeus had Prometheus chained to a rock and an eagle would swoop down to eat his liver, which would then regrow overnight, for the cycle of torture to begin again the next day. 

Why the gory intro? Because Prometheum, the only crypto securities platform registered with the SEC as a broker-dealer, announced that it would start listing ETH as its first asset, with the strong implication that ETH is a security. Probably not surprising, its announcement on X that it would do so (with the hashtag #digitalsecurities, no less), was excoriated (my favorite comment “you should have turned off comments”). This may be the impetus for the SEC to officially determine that ETH is a security, which would likely cause significant turmoil in the US market for ETH (and possibly reach markets worldwide). That stance could also start a turf battle between the SEC and the CFTC, the latter having officially taken the position that ETH is a commodity. 


While it is not clear yet whether this will turn out to be a doozy or a nothing-burger,1 it certainly has the ability to become one of the more important events in the crypto space. Choosing ETH as the first product for its platform seems a risky move for a startup like Prometheum to take. It certainly generates publicity, but as the comments on X indicate, it has the potential to unleash the fury of the cryptoverse upon Prometheum’s business if it is the catalyst for the SEC to pronounce ETH to be a security. The impact of the SEC declaring ETH a security would be far reaching and could be the most significant action taken by the SEC with respect to cryptocurrencies. And if the SEC does not do so, in the words of Prometheum’s founder, it may negatively impact Prometheum: “When the SEC says to us, 'It's not a security,' then we'll be troubled.”

1 “Nothing-burger” is the modern form of the legal term “nihil est.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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