#ThisWeekInCrowdfunding: YieldStreet SEC Settlement??, Tokenized Platforms??, Offerings Surge??
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Crowdfunding platform YieldStreet settles SEC fraud charges ( The Real Deal )
“As fraud allegations rock real estate crowdfunding,
Yieldstreet
, a New York-based player in the space, settled [
U.S. Securities and Exchange Commission
] charges that it failed to give investors key information about risks
“The omission may have cost investors millions of dollars, according to an SEC filing. YieldStreet agreed to pay $1.9 million in the settlement but did not admit to wrongdoing.”
The background of this story is pretty bizarre. The writer of the article, Suzannah Cavanaugh, summed it up pretty well.
“The SEC found YieldStreet and a subsidiary formed a fund in 2019 to offer investments in loans made to borrowers who transport retired ships and arrange their deconstruction.
The ships served as the collateral for the debt that the borrower agreed to repay with the money it made from breaking them up.
Ahead of the fund’s final offering, YieldStreet learned that ships backing loans it had already provided to the borrowers…had already been broken up, yet the group hadn’t repaid the debt.
YieldStreet did not disclose that information to investors before raising $14.5 million to fund additional loans to the borrower. It also failed to tell investors of the heightened risk that it would be unable to seize the collateral if the borrower defaulted.
Ultimately, YieldStreet discovered the borrower had stolen the money it made from breaking up several ships, including the one securing the loan in the offering.”
Interesting story coming out of Dubai that not only has equity crowdfunding implications but also Web3.
“As noted by the two companies, the tokenized equity fund raising platform will leverage blockchain technology to revolutionise private equity funding for early stage Web3 startups. TOKO is joining forces with Virtuzone after securing approval as a broker-dealer and exchange from Dubai’s Virtual Asset Regulatory Authority (VARA).”
The article also added this interesting insight:
“Neil Petch, Chairman and co-founder of Virtuzone noted in a statement that partnering TOKO and working together under VARA’s regulatory framework
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“Surge” in Reg CF Offerings During August, as Activity Bounces Back from Slow July ( Crowdfund Insider )
These data points have been something we’ve been bringing up on the NBT X page.
“During August, 107 deals closed, raising in aggregate $38.8 million – a dramatic increase from July, which booked $25.3 million. 72% of issuers hit their minimum funding goals.”
The stat that stood out the most:
“While there may be fewer investments, the amounts committed have increased, reaching its second highest to $2739, according to [ Crowdfund Capital Advisors ].”
CU Boulder professor writes roadmap to investment crowdfunding
“Investment crowdfunding might blossom into an even bigger online market, and a professor from the 美国科罗拉多大学博尔德分校 said Friday he has spent a decade creating the must-have roadmap — not only for companies and investors, but for policymakers.”
“The event launched the new book from CU Boulder Professor and Fulbright Scholar Andrew Schwartz, billed as the definitive guide to investment crowdfunding. “Investment Crowdfunding” aims to stay palatable for the general public while simultaneously striving to guide policymakers as they oversee the online marketplace.”
Here is a link to the book: Amazon.com: Investment Crowdfunding: 9780197688526: Schwartz, Andrew A.: Books
Some insights from the article:
“His basic conclusion, Schwartz said, is that investment crowdfunding has “huge potential for upside,” and a modest downside. He also makes the case for light regulations. A decade of research went into the book’s making, which also compares the regulatory landscape in the U.S., the UK, Canada, Australia, New Zealand and the EU.”
“Schwartz’s book outlines what market forces, economic incentives and non-legal guardrails can steer investment crowdfunding. For example, he said, crowdfunding platforms can function as gatekeepers by vetting companies, knowing if they allow a fraudulent actor to use their site and investors lose their money, those investors aren’t coming back.”