Swarm is Tokenizing Coinbase, Ripple Shares– Whether They Like it or Not
On the 13th of June, 2018, Swarm, which is one of the crypto startups, had officially announced that they have considered a new security token product which would allow the investors who are accredited, to be able to purchase as well as trade the equity in the privately owned tech companies such as Robinhood, Coinbase, Ripple as well as Didi.
Why is Swarm Tokenizing equity?
Basically, Swarm now allows the investors to pool their particular assets in order to obtain a private equity among one of the well-known names in Fintech as well as blockchain development. They might not hold an IPO (Initial public offering) to list their shares on the securities exchange.
The co- founder as well as CEO of the company, Philipp Pieper, says the following –
“Our goal is to democratize investing, and introducing tokens that represent equity is a major step forward in this mission. Now, any Swarm investor can hold equity in some of today’s most prominent tech startups.”
The company also reported that the equity has been sourced through brokers (secondary channels). They quoted – “approved secondary market transactions to acquire vested employee shares, or from venture capitalists who have directly acquired equity from these companies.”
By doing so, Swarm expects to tokenize about $15 to $25 million worth of equity per company on an annual basis, providing accredited investors with the ability to obtain deeper exposure to the cryptocurrency industry without having to fork over VC-level money.
What does Timo Lehes say?
Timo Lehes is none other than the company’s co-founder as well as CEO, and he says,
“By offering a Ripple token equity in Ripple the company, Swarm Fund offers an answer to what some say is a limitation of Ripple’s XRP token as an investment. XRP is a top cryptocurrency, behind only Bitcoin and Ethereum in market cap, but it does not represent equity in Ripple or reflect the value of Ripple payment protocol. Investors looking for a more holistic piece of Ripple’s value may look to the Ripple Equity Token as a solution.”
The fund won’t be available to the average buyer, even though the company’s mission was “democratize investing”. This is because the product is built on Swarm’s SRC-20 token protocol, and only accredited investors who pass KYC/AML verification will be allowed to purchase tokens, though the firm said that it hopes its products will be available to retail investors in the future.
Private Company’s say:
“As a private company, Coinbase 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. We will take appropriate action if we find people have sold Coinbase shares in violation of our agreements not to do so.” – CoinBase
“We have never spoken to Swarm, don’t have a record of them purchasing Ripple equity and would not have approved a purchase for this purpose.” – Ripple
“We are not aware of Swarm, or any such plans, and have no further comment.” – Robinhood
Clearly, even though Didi couldn’t respond, it is safe to say that none of the Private companies are excited about this news.