A scandal is unfolding in Detroit involving RealT, a company that raised over $2.7 million by selling tokens for properties that were never acquired.
The Core Issue
RealT reportedly raised millions by selling tokenized stakes in 39 homes without finalizing the purchases. The issue arose after local authorities filed a lawsuit citing code and tax violations involving over 400 properties linked to RealT. Court documents claim the firm collected over $2.7 million from investors for homes valued at just $1.1 million, without ever transferring the deeds.
Implications for Investors
Further investigation uncovered additional instances where RealT offered tokens for properties it had no legal claim to, triggering fears of a broader pattern of misconduct. Investors were promised rental income from these properties; however, many homes are vacant, blighted, or under rent controls, casting doubt on the financial viability of the entire model.
The Broader RWA Landscape
Critics argue this raises deep concerns about the RWA space, where flashy Web3 startups are venturing into complex real-world sectors like property management without the necessary experience or infrastructure. Some warn that returns for investors may be coming from new deposits rather than legitimate rental profits, fuelling comparisons to Ponzi schemes.
The RealT controversy highlights the fragility and opacity of some tokenized investment models in the market. It also raises questions about the need for stricter regulation and oversight in the sector.
