Detroit Sues RealToken LLC

Detroit has filed a significant nuisance abatement lawsuit against crypto real estate startup RealToken LLC and its corporate affiliates, claiming it’s the largest such lawsuit in the city’s history.

Details of the Lawsuit

The lawsuit, filed on Tuesday in Wayne County Circuit Court, names RealToken’s co-founders, Remy and Jean-Marc Jacobson, along with 165 corporate defendants. The complaint alleges that RealToken, a blockchain-based real estate investment platform, failed to meet health and safety standards across 400 properties it manages, leaving tenants in hazardous conditions.

Conrad Mallett, the City of Detroit’s corporation counsel, stated, “These defendants have profited from our communities while ignoring their most basic legal obligations as landlords and property owners.” He emphasized that neighborhoods are homes, not just investment portfolios.

Despite RealToken promising investors yields of up to 16%, tenants reportedly face unsafe living conditions due to poorly maintained rental properties that lack compliance certificates. Some tenants live in units with no heat, running water, or secure entryways.

A tenant reported living without a working shower for over two years, while another described a collapsed porch blocking access to her home. Inspectors identified 53 properties as posing an immediate risk to health and safety, citing structural damage, mold, sewage backups, and rodent infestations.

Detroit is seeking court orders to mandate repairs, establish rent escrow accounts, and hold the Jacobsons personally liable due to their alleged refusal to authorize necessary repairs.

Fractional Ownership and RealToken’s Operations

RealToken LLC, also known as RealToken Inc. and branded as RealT, has allegedly been acquiring numerous properties in Detroit while promoting fractional ownership through cryptocurrency. This process tokenizes real-world assets, allowing multiple investors to collectively own a property by purchasing shares.

According to RealToken’s whitepaper, it claims to have launched the “world’s first real estate tokenization platform” on Ethereum in 2019, later transitioning to Gnosis Chain due to rising fees on Ethereum. The company asserts that asset tokenization can improve transparency, efficiencies, and lower minimum investments in typically illiquid asset classes.

Edited by Sebastian Sinclair