Ethereum Founder Vitalik Buterin Has Ties to SEC Darling Prometheum—Here's How

Crypto Breaking News

Jun 21

The connection between Ethereum co-founder Vitalik Buterin and Wanxiang Blockchain Labs, although it's been public for years, is suddenly a very big deal. That's because as the industry pores over Prometheum, now the SEC's poster child for regulatory compliance, Crypto Twitter has realized that the startup is partly owned by Shanghai Wanxiang Blockchain.

Crypto Twitter is in shock that Vitalik Buterin was the Chief Scientist for Wanxiang. I don't think they realize yet that it was Wanxiang that setup and funded the wallets for both the Ethereum Foundation, & Vitalik Buterin.

Yes CT, it goes much much Deeper. https://t.co/PzG45UE7Ys

— TruthLabs (@BoringSleuth) June 16, 2023

Eyebrows were raised among the digital assets community following testimony from Prometheum co-CEO Aaron Kaplan on Capitol Hill, where his sentiments on regulatory compliance contrasted talking points from countless crypto firms and mirrored statements made by the SEC.

Prometheum touts that it's the first crypto firm ordained by the SEC and a member of FINRA, the finance-focused self-regulatory organization. Upheld by Gary Gensler as an example of how regulatory compliance for crypto companies is indeed possible, the firms' connection to Shanghai Wanxiang Blockchain drew scrutiny.

Wanxiang Blockchain Labs is a non-profit organization and China-based research institution started in 2015 by China Wanxiang Holding. The Labs' resources were integrated into Shanghai Wanxiang Blockchain, a firm established in 2017.

Buterin's connection to the nonprofit can be traced back to Ethereum's early days. In 2015, then-CEO of Wanxiang Blockchain Labs Feng Xiao formed a relationship with Buterin and purchased $500,000 worth of Ethereum. The funds helped Buterin pay developers, according to a report from Global Coin Research.

Buterin was one of several guest speakers at Blockchain Week 2016, a conference co-hosted by the Ethereum Foundation and Wanxiang Blockchain Labs, which also featured talks from Circle CEO Jeremy Allaire and Ripple Labs co-founder Jed McCaleb, according to the event's website.

At the time Buterin was described on the event's website as Wanxiang Blockchain Labs's chief scientist. That assertion is backed by a description of Buterin's role on the non-profits' website now. Separately, Buterin is described as a co-founder of the non-profit on Facebook.

Neither Wanxiang Blockchain Labs nor the Ethereum Foundation immediately responded to a request for comment from Decrypt.

Prometheum established a strategic partnership and joint development agreement with Shanghai Wanxiang Blockchain years later in 2018, according to an SEC filing. The deal gave Prometheum access to Wanxiang's "technology resources, industry contacts, [and] intellectual capital," adding that the organizations are committed to sharing resources.

Prometheum eventually terminated its agreement with Shanghai Wanxiang Blockchain in October 2021, Kaplan of Prometheum wrote in written testimony prepared for the House Financial Services Committee last week. After a year, it was apparent that "joint development was not viable," according to Kaplan.

"Wanxiang and its affiliates have no access to any Prometheum code, technology, software, or to the Prometheum ecosystem," he wrote, adding the company's code has been developed internally. "Prometheum is proud to be an American-born, bred, and controlled company."