Robinhood sells 'OpenAI tokens' without approval

Robinhood sells 'OpenAI tokens' without approval OpenAI Newsroom @OpenAInewsroom These "OpenAI tokens" are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval—we did not approve any transfer. Please be careful. OpenAI is Build your portfolio with Stock Tokens Robinhood Private Company Stock Tokens OpenAI SpaceX Where the Unicorns Roam More than 1,400 private companies are worth $1 billion or more Aggregate Post-Valuation Source: PitchBook Can you invest in a private company? It's difficult for retail investors to buy shares of a private company, unless they're accredited investors—people who make a certain amount of money or have certain licenses. Those rules exist in order to protect retail investors. If a person becomes an accredited investor, they can use platforms such as those offered by Forge Global Holdings Inc. and Ratemaker Securities to buy into private companies. However, those markets are opaque, have their own requirements and can be expensive. However, OpenAI was never consulted about this arrangement. The company quickly issued a public warning, clarifying that the tokens weren't official, that no equity had been transferred, and that any such partnership would have required their explicit approval, which was never sought or granted in this case. But Robinhood CEO Vlad Tenev has defended the product. Tenev said that OpenAI's complex company structure enables institutional investors to gain exposure to the company through "various instruments, like equity upon the event of a conversion to a for-profit at a later date." OpenAI was initially founded as a non-profit organization. However, it has since evolved to include a for-profit entity, which is owned by the non-profit. "In and of itself, I don't think it's entirely relevant that it's not technically an equity instrument," he said, "what's important is that retail customers have an opportunity to get exposure to this asset"—even if it's a private company—due to the disruptive nature of AI, he added. are connected to a special purpose vehicle that holds actual shares, giving users indirect exposure through that structure. European regulators are now scrutinizing the arrangement. Lithuania's Central Bank, which oversees Robinhood's local crypto operations, has requested detailed information about how these tokens are structured and marketed. The company hopes to be able to launch tokenized equities in other markets like the US and the UK in due course and pending regulatory approval, Tenev said. "For tokenization in the US, we do believe that the SEC has the authority to make it happen without legislation," he added. "The US shouldn't be far behind." They also argue that in the United States, the SEC already has the power to greenlight this model without needing new laws. But at its core, this is a fight over who gets to decide what's fair game in private markets and how far platforms can stretch the idea of innovation without direct company involvement.