September, REcoin, a startup that billed itself as the “only cryptocurrency backed by real estate,” was busted for fraud by the U.S Securities and Exchange Commission.
The Las Vegas-based startup had planned to use blockchain technology — a growing list of public records that are encrypted and linked across a network of computers — to support its currency. It launched an initial coin offering (ICO), the equivalent of an initial public offering for digital currency, or tokens, and claimed to have raised millions. But as it turned out, REcoin was duping investors. It never had “any real operations,” had made no investments and misrepresented how much money was raised, according to the SEC.
REcoin is one of many startups looking to leverage blockchain within real estate. And incidents such as this illustrate some of the potential hazards of the nascent technology. While blockchain-based applications are touted as secure, the world of ICOs is a virtual Wild West. It’s a regulatory gray zone, and anyone can launch a token sale with nothing more than a white paper. It’s the same technology that enables the use of Bitcoin — which JPMorgan Chase CEO Jamie Dimon referred to in September as “a fraud.”
Read more to find out how Real Estate is using Bitcoins to make sell homes and record deals by clicking here.
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