"Splitting shares without permission"...Robinhood directly defends against AMC's backlash

▲ Robinhood (HOOD), AMC, stock tokenization/AI generated image

Robinhood (HOOD) directly defended its stock token business despite strong opposition from AMC Entertainment (AMC).

According to crypto media outlet BeInCrypto on September 10, Robinhood CEO Vlad Tenev appeared on CNBC to state his company's position on its stock token business. Robinhood, through Robinhood Assets Limited, has expanded its offering of tokenized stocks to include over 190 companies, including AMC. These companies did not directly participate or give their consent.

AMC CEO Adam Aron claimed that Robinhood violated U.S. securities law by issuing unregistered tokens linked to AMC shares. Aron mentioned seeking external legal advice and the possibility of engaging with the U.S. Securities and Exchange Commission (SEC). He strongly criticized, stating, "AMC was not involved in any way and does not approve of this in any manner." At the time the controversy erupted, AMC's stock price surged up to 15% in pre-market trading.

Tenev countered that a listed company cannot control all financial products created based on its shares once they begin trading. He described Robinhood's stock tokens as debt securities collateralized 1:1 by actual shares. Token holders are exposed to changes in the economic value of the underlying shares but do not possess corporate voting rights.

Dan Gallagher, Robinhood's Chief Legal Officer, also publicly defended the company's interpretation of U.S. securities law. Gallagher stated, "We know a little bit about U.S. securities law, and we're not going to stop. If they send lawyers, we'll tell them." The clash between Robinhood and AMC is escalating into a regulatory issue concerning whether tradable tokens can be created based on a listed company's shares without its consent.

BeInCrypto reported that if AMC's threatened SEC complaint materializes, it could become a test case for determining the extent to which Robinhood's stock token structure is permissible under U.S. securities law. The core of the current debate focuses on whether tokens, even if they track the economic value of actual shares, can be circulated as separate financial products without the issuing company's approval.

[Key Article Summary]

-Robinhood (HOOD) offers tokenized products based on the shares of over 190 companies, including AMC.

-AMC's CEO claimed that these tokens violate U.S. securities law, but Robinhood countered that they are debt securities collateralized 1:1 by actual shares.

-With AMC raising the possibility of SEC action, the legal scope of issuing stock tokens without the consent of the listed company has emerged as a key issue.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*