Last week AMC CEO Adam Aron pulled no punches in airing his views about Robinhood tokenized stocks. The stock broker recently re-launched its offshore tokenized stocks as structured loan notes that are backed one-for-one by the underlying stocks. In other words the token investors hold debt, not the stocks themselves. AMC, the world’s largest theater company, is one of those underlying stocks.
“I find this practice to be contemptible, outrageous, disgusting, detestable, inexcusable, vile. How can it possibly be legal? We have no connection to this at all, and do not condone it in any way. We immediately are going to have our outside securities counsel look into this,” Aron wrote on X.
Robinhood’s CEO, Vlad Tenev, responded to CNBC on 9 September saying “Issuers should have control and do have control over the rights and obligations of the stock that they issue, but that doesn’t mean they control everything about it.” He added, “In particular, they don’t control other companies issuing their own securities that reference those shares.”
There are two common complaints about these kinds of synthetic tokenized stocks. The underlying stock issuer loses their relationship with their investors, especially for voting. AMC has a particularly strong retail investor base, so this matters more to AMC than to other companies. That said, Kraken (xStocks) and Ondo with similar products have started to offer voting. But that isn’t the same because these companies don’t have an obligation to pass through those votes. Plus, ETFs have the same lack-of-voting feature. Secondly, thin trading overnight and via automated market makers could result in distorted market prices. That could impact opening prices the next day. But there’s a third point that isn’t being mentioned, which could be the reason why AMC is one of the first issuers to complain publicly: what happens to the shares behind the tokens.
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