Crypto Firm Sued for Selling Tokens Backed by Non-Owned Properties

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The company is under scrutiny after reportedly raising millions by selling tokenized stakes in 39 homes, despite allegations that the purchases were never finalized.

The issue initially came to light when local authorities in Detroit filed a lawsuit citing code and tax violations related to over 400 properties linked to RealT. While the firm does own a significant number of homes in the area, court documents allege it collected over $2.7 million from investors on properties valued at approximately $1.1 million—allegedly without ever completing the property deed transfers.

Further examination has revealed additional instances where RealT offered tokens for properties to which it purportedly had no legal claim, raising concerns about a potentially widespread pattern of misconduct. Investors were promised rental income from these properties; however, many of the homes are reportedly vacant, dilapidated, or subject to rent controls, casting doubt on the financial sustainability of the entire business model.

Critics contend that this situation raises serious questions about the Real World Asset (RWA) space, where emerging Web3 startups are entering intricate real-world sectors such as property management without the necessary experience or infrastructure to succeed. Some analysts are now suggesting that investor returns may be derived from new deposits rather than actual rental profits, drawing parallels to Ponzi schemes.

While regulators have been increasingly focused on the RWA market, the RealT controversy is highlighting the potential fragility and lack of transparency within some of these tokenized investment models.