- The company used the “loophole” with “Provision A” to promote it
- Now Republic is preparing a new investment product
In March 2021, Republic launched the Republic Realm Metaverse Real Estate Fund. He has invested in virtual real estate at sites such as Sandbox, Axie Infinity and Decentraland.
The fund was available to a limited number of clients. But in December 2021, the firm began promoting it with the goal of attracting more investors. With a yield of 145%, this was not a difficult task.
How it works? In fact, here we are talking about rent, sublease and resale. The fund invests in certain “land”, then rents it out, for example, to a retailer or a high fashion brand that wants to open its point of sale on the site.
The fund could set a new trend, but in 2022 the market faced a recession. The popularity of the metaverses has fallen. Well, after the bankruptcy of the FTX product got interested federal authorities.
As a result, the SEC (Securities and Exchange Commission) officially closed it. This is how the decision was commented in Republic:
“In light of the feedback from the SEC and other regulatory decisions, we no longer see a way forward with this proposal. Unfortunately, this means that it will be cancelled. Now we are working on a new version, taking into account all the amendments.”
The company did not name the approximate timing of the launch of the product. In addition, the fund, apparently, will continue to work, but only for a narrow circle of clients.
Note that when promoting their product, Republic was guided by “Regulation A” (Reg A). This is a kind of “loophole” that allows you to submit shares through stock crowdfunding without a license from the SEC.
But the Commission considered that the fund does not fall under this rule. Control was tightened after the bankruptcy of FTX, as well as the subsequent investigation of fraud by the top management of the exchange.
After a surge in popularity in 2021, the metaverse trend is on the decline. Some, such as Kaspersky Lab, even consider them a threat. Others, including Bill Gates, urge not to inflate their importance. And all this, together with the “bear”, affects the industry.