AMC CEO blasts Robinhood for operating a 'quasi-fake market' for tokenized stock

• AMC's CEO unloaded on Robinhood over social media on Friday.
• Adam Aron bashed the brokerage for operating a "quasi-fake market" for tokenized stocks.
• "I hereby call on you and Robinhood to voluntarily CEASE AND DECIST the trading of AMC stock tokens."

"The list of concerns is almost existential."

So kicked off a lengthy tirade from AMC CEO Adam Aron on Friday as he bashed Robinhood for enabling the trading of "tokenized" versions of AMC and other stocks.

Aron was replying to Robinhood CEO Vlad Tenev, who had responded to an earlier post from Aron pointing to the offshore unit that Robinhood issues tokenized stocks from. "What's the concern?" asked Tenev.

"In good conscience, how can Robinhood as a U.S. company set up an operation in far offshore Jersey, an island 3000 miles away, and market a security sort of posing as AMC in some shape or fashion, and not comply with U.S. securities laws. That is shocking and shameful."

Stock tokens are crypto-enabled versions of actual shares that trade 24/7 on the blockchain. Similar to a stablecoin that's backed by real currency, tokenized stocks are meant to be linked 1:1 to the underlying shares of a company that they reference.

Robinhood launched tokens linked to popular US-listed stocks and ETFs last year, sending its own stock soaring with the announcement. Importantly, stock tokens aren't available to US users, and are not registered under US securities law.

This issuer of Robinhood's tokens is indeed registered in the island of Jersey, according to documents on the brokerage's website. This is partly what Aron was taking aim at in his post on Friday, claiming that Robinhood had set up "some kind of fictitious synthetic equity market" that hurts a company's ability to raise capital.

"These are but a few of my concerns about your actions. I hereby call on you and Robinhood to voluntarily CEASE AND DECIST the trading of AMC stock tokens. If you don't, our high priced securities counsel has been asked to see whether we can force you to stop."

Robinhood's chief legal officer hit back in his own reply:

It's not the first time Robinhood has drawn the ire of a company for tokenizing its stock. The brokerage said last year that it would allow its users to trade tokens tied to shares of OpenAI, which is a private company. The ChatGPT maker quickly distanced itself from the move, stating that, "We did not partner with Robinhood, were not involved in this, and do not endorse it."

A Robinhood spokesperson gave the following statement: "We stand firmly behind our Stock Tokens and their ability to provide international exposure to US equities, modernize the financial system and expand opportunities for ownership globally."

The post AMC CEO blasts Robinhood for operating a 'quasi-fake market' for tokenized stock appeared first on Business Insider