- AMC CEO Adam Aron called Robinhood’s Stock Tokens ‘abhorrent’ as they undermine investor protections ensured by US securities laws while questioning their real backing.
- It follows Robinhood lawyer and former SEC Commissioner Dan Gallagher’s dare for AMC to challenge the legality of the company’s tokenized stocks.
Robinhood CEO Vlad Tenev has been attending one interview after another as the debate intensifies over the company’s Stock Tokens. The trading platform’s Chief Legal Officer, former Securities and Exchange Commission (SEC) Commissioner Dan Gallagher, also defended the product and dared critics, like AMC CEO Adam Aron, to challenge the legality of tokenized stocks that don’t have approval from their underlying companies.
AMC CEO Adam Aron Calls Robinhood’s Stock Tokens ‘Abhorrent’
Responding to Gallagher, Aron called out the former SEC Commissioner for “standing behind” in a practice that he considers “abhorrent.” The AMC CEO argued that tokenized stock “defeats the very ethos of stock ownership.”
Aron explained that public financial markets exist to enable companies to raise capital while investors get a share in their wealth creation. Wrapping them in tokens reduces investing in them to a “gamified business-oriented casino.”
Additionally, Aron criticized Robinhood for blatantly advertising its Stock Tokens in the US, yet not offering them to Americans, and for being domiciled in Jersey, the largest of the Channel Islands off the coast of France.
Moreover, the AMC boss reminded Gallagher that US securities laws have protected the public over the past century. Still, despite being a former agency official, the lawyer is promoting products that undermine the investor protections those regulations have granted. Aron underscored that tokenized stocks without approval from the companies they represent bring Robinhood “dishonor” and do not make it an innovator.
Tokenized Stocks are a Material Misrepresentation of Underlying Company Shares
Meanwhile, Aron asked Tenev why Robinhood seems to be waving in everyone’s face its Jersey operations, which do not operate within the protection of US securities laws. He claimed that it creates “potential confusion” that investors can enjoy the same rights offered by US-regulated stocks, such as dividend payments and voting rights to a publicly traded company.
Furthermore, Aron questioned the 1:1 real-share backing of Stock Tokens that Tenev keeps insisting on in interviews. The AMC CEO pointed out that the tokens are not technically backed if Robinhood lends the real shares to short sellers.
The AMC CEO advised both Tenev and Gallagher to stop making material misrepresentation of tokenized stocks.
“Choose whatever descriptors you think best make sense under the circumstances: Non-regulated, derivative, synthetic, sham, debt-backed securities trying to simulate actual real stock, or pick your own words if these don’t fit,” said Aron.
Community Feedback
Many agreed with Aron’s latest tirade against Robinhood’s tokenized stocks. They believe that it’s “completely disrespectful” to actual shareholders. Others referred to it as market manipulation through memecoins paired against a stock.
Others recalled how Gallagher turned a blind eye to the massive $65 billion Bernie Madoff Ponzi scheme during his tenure as Deputy Director of Trading and Markets at the SEC to drive the point that he has a history of screwing up retail investors.
