A Maybe Mirror Image of SpaceX Is Enough for Some Investors

(Bloomberg Opinion) – The Republic of Digital Assets Platform makes retail investors to access investors with Elon Musk and Mirror Jetens with Mirror Jetens. From the description on the website, this is a funny way-perhaps not too funny for investors-it seems to be fun, which screams for the crypto-friendly securities and the stock market commission to close it.

Of course, it is possible to deal with some of my concerns when all legal details emerge, but there is a fundamental problem with this idea. And beyond this effort, there is a problem of rules that are hungry to exposure to companies that want to comply with public safety requirements for retail investors.

In the last 17 years, I have spent a lot of time to explain the crypto to skeptical investors. The coins are one of the easier aspects to understand, but mirror coins always shorten people. A coin is simple enough. Everyone understands objects or pieces of paper representing the ownership of an asset such as stock certificate or automobile title. The coins go one step further to presence the object or paper, not something you can only use to prove ownership. This is like a dollar bill – if you have it, you will have it. The dollar bill does not prove the ownership of another asset, it is being.

The advantage of cryptographic coins is that they can be processed instantly with cryptographic security in large or fractional amounts all over the world without delay and settlement costs. You do not need any situation to buy or sell them. They cannot be decorated, destroyed, destroyed or imitated by the authorities discovered by customs. They cannot be stolen unless you explain your special key and they will not disappear unless you forget. Many people are trying to token all kinds of assets.

The mirror coin is like a coin without existence. Ha? Did you think the token was existence? Think of a mirror coin as the mirror image of being. Why would anyone pay something for the mirror image?

Standard mirror coins were printed. For mint, you should lock guarantees in cryptographically safe forms, usually equal to 150% of the value of mirrored presence or more. The collateral is in cryptographically locked in the mirror coin, so the coin holder does not have to trust anyone.

If the price of assets increases to a certain point, 25%, for example, represents only 120% of the guarantee value, the coin is liquidated. The value of the asset is paid to the owner and the rest is returned to Minter. Some mirror coins have more complex mechanisms that include receiving a coin or adding collateral.

Therefore, the entity in a standard mirror coin is a claim against the guarantee. Request amount, Tesla Inc. The share of shares is equal to the value of some assets. An owner has the risk of decreasing the tesla stock, and the stock has such a risk of increasing that it will be insufficient to pay the collateral fully. For many retail investors, the simplicity and ease of implementation through a coin is worth an extra risk.

Kendrick Nguyen, Chairman of the Republican Executive Officer, told Wall Street Journal that the company plans to keep the shares of the basic security or to be exposed to another exposure, but this was not promised on the website where the Republic received “reservation için for the spacex jets on Friday. The company does not collect cash, but investors should access a bank account, crypto currency or Apple Pay without knowing the type or quantity of collateral beyond the intent expressed by the CEO. The intention is even more far, because a special purpose responsibility company created to distribute the coins and the republic guarantees to pay, not the republic itself.

The real entity reflected is the unsecured debt in the Republic, not the Republic. It is not clear how much Republicx should pay to investors. Even if republicx holds enough collateral, it will not be cryptographic for coin holders. Token owners will not even have a legally secure right, they only borrow unsecured in the president.

Republicx does not seem unlikely to buy the SpaceX stock as a guarantee. This requires the cooperation of SpaceX, which is by the retail distribution of its stock. Republicx can be exposed indirectly by purchasing shares in special purpose vehicles that hold the SpaceX stock, but this is not easy and brings additional legal risk. In addition, such stocks are usually available only in important premiums according to market price. And even if one of them was possible, the assets could not be in cryptographic to the mirror coin.

Perhaps the Republic thought about these objections and will present financially solid, investor -friendly proposal documents. Nevertheless, the deeper problem is that it is almost impossible to purchase the official shares of SpaceX and other warm special technology companies. Because of extraordinary demand, people are willing to accept indirect ownership forms such as shares in a special purpose vehicle that has SpaceX shares or owners of other SPVs or is another demand or guarantee. Frauds that exploit this demand are common. This is unhealthy for investor protection, corporate governance and transparency.

In 1986, SEC was told that Bill Gates pushed Microsoft Corp to remove similar concerns. Like Elon Musk today, Gates could take all the capital he wanted without opening to the public and did not want to lose supervision, expenses and control with a public list. However, at some point, you have enough retail investors and is a risk for everyone who stays outside in the cold. I have no idea whether this is convinced to create a short time in some situations that allow SpaceX and companies to open up to the public or to participate in the legally examined ways of retail investors. But if nothing is done, I’m sure something bad will happen.

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This column reflects the author’s personal views and does not reflect the opinion of the Editorial Board or Bloomberg LP and owners.

Aaron Brown is a former President of AQR Capital Management. He is also an active crypto investor and has venture capital investments and consultancy ties with crypto companies.

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