Crypto Project Swarm Has Tokenized Robinhood’s Private Equity, Is It Legal?
Cryptocurrency Project, Swarm Claims To Tokenize Robinhood Equity, Done Without Consent?
Cryptocurrency startup proclaimed as “the blockchain for private equity”, Swarm, believes it can help crypto investors earn fractional ownership of private companies, that is, companies that have not publicly listed their shares. Its first effort, as per CCN’s report, is by promoting shares of commission-free stock trading app, Robinhood.
How is it possible that shares that are not listed publicly can still make it to the general public? It seems that Swarm has come up with a way to do so. As per existing information, the crypto startup managed to obtained equity from former Robinhood employees who were eager to make a return before the company eventually retorts to an initial public offering (IPO). The accumulated shares are supposedly traded on the Swarm platform, in the form of SRC20 tokens, a cryptographic standard for securities.
What makes Swarm’s efforts somewhat concerning is the fact that Robinhood is neither aware of the firm and its plans, nor has its team expressed interest in taking part. CCN supposedly reached out to Robinhood on Wednesday, August 14, 2018, to which the firm openly said they did not know Swarm.
According to the CEO of Swarm, Philipp Pieper, nothing is new with what they are trying to accomplish, except for the single feature of tokenization. More specifically, Pieper said,
“Secondary equities transactions and refinancing of legal entities which hold private company equity are not new in the United States. What’s new here is the tokenization of these assets,” adding that the token holders will be the ones to benefit from it, as they are given the opportunity to “participate in the value creation of the very network they are part of.”
Swarm also has its own native token dubbed, the SWM token, and according to the team, it will be used for gas, governance and Swarm incentives.
The Robinhood Equity Token (RHET) is supposedly live for funding on Swarm. As for who can invest, it has been noted that this effort is addresses accredited investors, of whom can prove their annual income is on average $200,000, with an additional $100,000 for married individuals. To limit even more participation, investors interested in the fractional ownership of Robinhood need to provide evidence of having a net value of $1 million.
Moving forward, more privately-owned companies will be targeted by the startup according to Robinhood news, some of which include Coinbase Ripple and Didi. CCN noted that Coinbase has since filed for a cease-and-desist letter, to which the Swarm team strongly believes will not become a hindrance towards their goals.