Inside the Robinhood Token Stock Controversy: Legality, Transparency, and True Ownership
Tokenized stocks, a seemingly revolutionary technological step toward democratizing access to financial assets, are now under fire after Robinhood announced the listing of tokens representing equity in OpenAI and SpaceX. While pitched as a way to expand access to private markets, Robinhood’s new product is facing backlash from stakeholders including OpenAI, Elon Musk, the DeFi community, and legal experts.
Robinhood Launches Tokenized Stocks: Accessing Private Markets or Creating a Virtual Financial Product?
Earlier this week, Robinhood announced the issuance of digital tokens representing shares in OpenAI and SpaceX as part of its strategy to expand its investment services in Europe. The tokens will be issued on Arbitrum, an Ethereum layer 2 scaling network, and will be priced in USD, according to the company. Eligible European users will receive the tokens through a limited giveaway.
Robinhood asserts that the tokens only provide “indirect exposure to the private market,” through Robinhood’s indirect ownership of special purpose vehicles (SPVs). Token buyers do not own actual shares, do not have voting rights, and cannot transfer the tokens off the Robinhood platform.
OpenAI and Elon Musk: Outright denial and public criticism
Shortly after the news broke, OpenAI issued a statement asserting that it had no involvement and did not approve any share transfers. In a social media post, OpenAI stressed that the tokens issued do not represent shares in the company and warned against the legality of the product.
Elon Musk, founder of SpaceX and co-founder of OpenAI, also chimed in sarcastically:
“Your ‘equity’ is fake.”
The response from OpenAI and Musk not only denied the actual ownership of the tokens, but also implied that Robinhood was creating a misleading product that offered a stock investing experience without actual shares.
Legal experts warn of serious risks
Kurt Watkins, a lawyer specializing in finance and securities, said that Robinhood’s product is likely not commercially viable in the United States, especially given the ambiguity of the SPV structure and lack of legal transparency. He warned that:
“There is no guarantee that the tokens actually track the value of OpenAI, and that the holders do not have any significant ownership interest.”
According to Watkins, this product could easily trigger registration requirements under securities laws, which require Robinhood to provide comprehensive disclosures, which the company currently does not meet. This is exactly the type of financial product that US law wants to limit, because it can mislead retail investors.
DeFi community criticizes the closed nature of Robinhood's system
In addition to being opposed by the original owners, Robinhood has also been criticized by the DeFi community for creating a "walled garden." According to Ren, a member of the Electric Capital fund, the smart contracts behind Robinhood's crypto shares are highly controlled:
"Every token transfer has to be checked through a list of KYC/AML wallets - completely incompatible with DeFi."
Ren criticized Robinhood for using blockchain technology to expand the centralized financial model (CeFi), instead of building an open, decentralized and transparent system.
What does Robinhood say?
In the face of backlash, Robinhood has maintained that its product is simply an investment vehicle that tracks the value of private assets, offering no equity or voting rights. The company claims that it is a novel way for retail investors to gain exposure to large, unlisted companies.
However, Robinhood has clearly acknowledged the limitations: US customers cannot buy the tokens due to current regulations; users cannot withdraw the tokens outside the Robinhood ecosystem; and the tokens do not confer any real ownership rights.
Conclusion: A Warning from the Future of Digital Finance
While the tokenization of real assets is a potentially revolutionary trend in finance, from stocks to real estate to artworks, the Robinhood incident shows that there is still a fine line between innovation and confusion.
Issuing crypto shares without the consent of the issuing company, lacking legal ownership, not being able to interact with DeFi ecosystems, and being warned by experts about legal feasibility… all raise a big question: Is Robinhood pioneering a new future or building a virtual and confusing investment model?
If this model continues to develop without transparency, dialogue, and a clear legal framework, retail investors may be the first to suffer the consequences of the digital “ownership dream”.