Get exclusive fiat and cryptocurrency analysis on Hacked.com for just $39 per month. Click here now!
Privately-held industry giant Coinbase has sent a cease-and-desist letter to cryptocurrency startup Swarm for the latter’s attempt to tokenize and sell the San Francisco cryptocurrency exchange operator’s shares.
A Swarm spokesperson confirmed to CCN that the company had received a cease-and-desist letter from Coinbase but expressed optimism that the attempt to thwart Swarm’s plan would not be successful. The spokesperson also said that Swarm had not received cease-and-desist letters from any other company.
As CCN reported on Wednesday, Swarm has unveiled a plan to obtain equity in privately-held tech companies like Coinbase, Ripple, Robinhood, and DiDi and then issue security tokens that represent fractional shares of that equity.
Coinbase had not responded to our inquiry about the cease-and-desist order by the time of writing, but the firm told CCN yesterday that it would take “appropriate action” against anyone who sold Coinbase shares in violation of their purchase agreements.
“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.”
Similarly, Ripple told CCN that it “would not have approved a purchase [of Ripple shares] for this purpose” and had never to spoken to Swarm about the initiative.
Swarm, however, says that this equity was obtained, with the help of brokers, through secondary channels from former employees and other early investors with fully-vested shares. The company claims that the method used to obtain and tokenize this equity does not violate the purchase agreements signed by those investors.
Moreover, the company claims that the product will not violate securities regulations since only accredited investors who undergo KYC/AML verification will be allowed to purchase and trade the security tokens.
Featured Image from Shutterstock
Follow us on Telegram.