The association between Vitalik Buterin, the co-founder of Ethereum, and Wanxiang Blockchain Labs, which has been known publicly for several years, has recently gained significant attention. This is due to the fact that Prometheum, a startup that has become the SEC’s model for regulatory compliance, is partly owned by Shanghai Wanxiang Blockchain. As the industry scrutinizes Prometheum, the connection between Buterin and Wanxiang Blockchain Labs has become a topic of discussion on Crypto Twitter.
The digital assets community expressed surprise after Prometheum co-CEO Aaron Kaplan’s testimony on Capitol Hill, as his views on regulatory compliance differed from those of numerous crypto companies and aligned with the statements made by the SEC. This caused concern among some members of the community.
Prometheum claims to be the first cryptocurrency company authorized by the SEC and a member of FINRA, a self-regulatory organization focused on finance. Gary Gensler has cited Prometheum as an illustration of how regulatory compliance can be achieved by crypto firms. However, the company’s association with Shanghai Wanxiang Blockchain has come under scrutiny.
Wanxiang Blockchain Labs is a non-profit research institution based in China that was founded in 2015 by China Wanxiang Holding. In 2017, the resources of the Labs were incorporated into Shanghai Wanxiang Blockchain, a company that was established at that time.
Buterin’s association with the non-profit organization can be traced back to the early days of Ethereum. In 2015, Feng Xiao, the former CEO of Wanxiang Blockchain Labs, established a connection with Buterin and acquired $500,000 worth of Ethereum. The proceeds were utilized by Buterin to compensate developers, as per a report by Global Coin Research.
According to the event’s website, Buterin was among the guest speakers at Blockchain Week 2016, a conference that was jointly hosted by the Ethereum Foundation and Wanxiang Blockchain Labs. The event also featured presentations by Jeremy Allaire, the CEO of Circle, and Jed McCaleb, the co-founder of Ripple Labs.
During that period, Buterin was identified as the chief scientist of Wanxiang Blockchain Labs on the event’s website. This assertion is corroborated by the current description of Buterin’s role on the non-profit’s website. Additionally, Buterin is referred to as a co-founder of the non-profit on Facebook.
Decrypt’s effort to obtain a comment from Wanxiang Blockchain Labs and the Ethereum Foundation did not yield an immediate response.
As per SEC filing, Prometheum entered into a strategic partnership and joint development agreement with Shanghai Wanxiang Blockchain in 2018. The agreement granted Prometheum access to Wanxiang’s technological resources, industry connections, and intellectual property. It also stated that the two organizations are dedicated to exchanging resources.
According to written testimony that was prepared for the House Financial Services Committee by Kaplan of Prometheum, the company ultimately terminated its agreement with Shanghai Wanxiang Blockchain in October 2021. Kaplan stated that it became evident after a year that joint development was not feasible.
In his written statement, Kaplan asserted that Wanxiang and its affiliates have no access to any of Prometheum’s code, technology, software, or ecosystem. He further stated that the company’s code has been created in-house and that Prometheum is proud to be a company that is American-born, bred, and controlled.
