Crypto Startup Swarm Begins Selling Robinhood Equity Tokens To Accredited Investorsbr>
Cryptocurrency startup Swarm has opened up pre-funding of the Robinhood Equity Token (RHET) on its platform.
Swarm is creating a unique market infrastructure built on blockchain technology that enables investing cryptocurrency into real assets and deploying traditional capital into crypto markets in a new way. Swarm gives fund managers access to capital from a new class of investors who want access to institutional-type investments, but don’t have the high minimums many institutional funds require. By leveraging blockchain, Swarm provides an entire platform from which businesses can create crypto-based enterprises with a wellspring of funding built in.
In its announcement, Swarm said accredited investors would now be able to reserve their stake in a fund created for the purpose of holding equity in Robinhood, a commission-free investing app that recently earned a $5.6 billion valuation. While Robinhood itself is not holding any security token offering (STO), Swarm has sourced equity through established relationships with former employees and other equity holders, and converted committed funds into RHET equity tokens, using the SRC20 standard.
According to the offer page, there is a soft cap of $300,000 and hard cap of $1 million. Once the minimum funding goal is reached, a Swarm syndicate manager will form an entity to hold the equity. The ownership of this entity is tokenized for investors to access. Their token holdings represent fractional ownership of that entity, which in turn holds equity in Robinhood.
Philipp Pieper, CEO of Swarm, said that 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, and the doors opened by this innovation,” said Pieper. “One of the key innovations of tokenization is that token owners can participate in the value creation of the very network they are part of. Swarm is bringing this paradigm shift to companies that are key players within this movement, but have yet to permit the network to participate.”
In June of this year, Coinbase sent a cease-and-desist letter to Swarm for the latter’s attempt to tokenize and sell the crypto exchange operator’s shares. At the time, Coinbase said that as a private company, it does not allow trading of stock on secondary markets for a variety of reasons, including the fact that there is not full and equal information available to the market.
Swarm responded by saying that the method used to obtain and tokenize the equity does not violate the purchase agreements signed by former Coinbase employees and other early investors.