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Backlash against the Swarm Fund

June 14, 2018


Today, the Blockchain firm called Swarm announced what seemed to be somewhat of a revolutionary step in Crypto investing.


Since their inception, Swarm or Swarm Fund have identified themselves as the “Blockchain for Private Equity.”


This doesn’t mean that they are catering exclusively to venture capitalists. What it does effectively mean is that the major part of what they have been working towards is enabling almost anyone to invest in Blockchain firms, through secondary markets.


To understand exactly what this means, it is important to review what the Swam Fund is. At its heart, it aims to be the Blockchain that makes investing accessible to and easy for every sort of investor. On the main page of their website, they mention “crypto investors, wealth investors, and everyday investors,” as their primary user groups.


The primary benefit of the “Swarm Chain” for Crypto investors is expressed as the fact that they can use Swarm’s built-in AI to minimize the risk in their Crypto portfolios, as well as eliminate the need for fiat.


 For wealth investors, the main benefit is said to be that they can avoid the traditionally lengthy legal process that it is necessary to go through to make large scale investments on the behalf of many customers at once.


 Finally, the primary benefit for what are called everyday investors is stated as the fact that they no longer have to be accredited. Perhaps even more importantly, they are not required to have a very high net worth to access excellent investment opportunities.


Overall, it’s first necessary to make clear that Swarm does not advocate skirting the law and seems to be stating that lengthy legal requirements are merely shortened by the fact that they are providing a security token, which is already regulated in some way.


Secondly, they emphasize four features throughout their investment platform: joint ownership, tradability and tokenization, and the overall feature of empowerment of investors, as discussed above.


Here, under the category of tradability, the Swarm development team has made sure to emphasize that they will respect regulations, as well as laws. Under the category of tokenization, they single out “fractional ownership” as a key differentiator for their platform.


What fractional ownership seems to mean is that several people can go in on an asset and own percentages of it, which effectively leads to the announcement from today.


Swarm will now be supporting what they have defined as “equity tokens.”


Some of the first examples of these tokens will be used as investment vehicles for Coinbase and Ripple.


In explaining how this option came about and how it works, Swarm reportedly said to Coin Desk that they received these equity tokens in the form of vested options or in the form of equity in the companies, from venture capital firms who had already invested in them.


While Coinbase and Ripple are not the only companies to be listed on Swarm in this fashion, they are, perhaps, the most notable and they have pushed back.


Ripple brass apparently denied having any sort of conversation with Swarm on this subject and Coinbase denied having given anyone the option to sell shares in their company to secondary markets, such as the one Swarm is offering.


On the other side of things, according to an article by Coin Desk, there has been no evidence of legal action taken against Swarm at this time.


With the news having been broken today, as the situation plays out, investors will be able to see just how serious Swarm’s latest offering is. Either way, it is something that could move the Blockchain industry closer to being able to offer the same and more as compared to the traditional finance industry.




By: BGN Editorial Staff

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