Coinbase sent a cease-and-desist letter to Swarm so that the latter would stop its plans to provide a secondary market to trade tokenized Coinbase shares.
US-based crypto exchange Coinbase sent a cease-and-desist letter to Swarm after the crypto-oriented startup announced its intention to tokenize and sell shares in Coinbase. A cease-and-desist letter is a document requiring a company to stop an allegedly illegal activity and never restart it again. Along with Coinbase, Ripple also does not want its shares to be sold on the secondary markets.
On Wednesday, Swarm announced that it would allow its investors to trade tokens representing shares in tech companies like Coinbase, Ripple, Robinhood or Didi, thus forming a secondary market for equity in those crypto-oriented firms. The shares will be offered via partners who bought these from former employees.
Swarm CEO Philipp Pieper said then:
“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.”
However, it seems that the targeted crypto companies are not happy to see their shares sold without permission. Coinbase went further with the measures, but a Swarm representative said that the company hopes to succeed with its plans anyway. The spokesperson also confirmed that Coinbase was the only company to send a cease-and-desist letter.
Coinbase reportedly said in a statement that it would take measures against any entity that sold its shares ignoring the purchase agreements.Ripple also said that it wouldn’t have allowed buying its shares in this context.
On the other side, Swarm claims that the shares were obtained legally and that they will be sold only to accredited investors under KYC/AML practices.
On Wednesday, Coinbase announced that its index fund was live, but only to accredited investors.