Two Literal Crypto Bros Built a Real Estate Empire. Then the Homes Started to Fall Apart

[Narrator] These Detroit properties

are supposed to be charming up-and-comers

that generate rental income

for small-time crypto investors.

But instead, they are falling to pieces.

So how did we get here?

Back in 2019, a startup called RealToken

went looking for a place

to trial a novel type of real estate investment

that would allow almost anybody to become a landlord.

With its cheap housing stock,

and ambitions of urban renewal, Detroit was the perfect fit.

The idea was simple:

Each property would be represented

by hundreds of crypto tokens sold for around $50 a piece,

meaning practically anyone could afford to invest.

Token holders would collect a portion of a property's rent

and benefit from any growth in its value over time.

Soon, investors began to pile in.

RealToken has since tokenized

around 500 buildings in Detroit

and 200 more in cities across the Americas.

Though US residents are not allowed

to invest for regulatory reasons,

at least 16,000 people from 150 countries

have purchased tokens.

Lately, though, RealToken has run into trouble.

Last summer, the City of Detroit sued RealToken

and its founders, Remy and Jean-Marc Jacobson,

alleging hundreds of public nuisance

and regulatory violations.

In many cases, the city government claimed

RealToken tenants were living in substandard conditions.

When WIRED visited Detroit last September,

we met tenants who said their homes

aren't being properly maintained

and saw some of the problems firsthand: flooded basements,

damaged roofs, crumbling porches,

smashed windows, fire damage, and so on.

Other RealToken properties we visited had gone up in flames

or were occupied by squatters.

Some RealToken investors say they feel betrayed

by the Jacobsons.

They were looking for a way to invest in the property market

and make a steady income,

only to find out

that some of the homes had fallen into disrepair

and tenants had been living in sometimes unsanitary

and dangerous conditions.

RealToken is fighting the lawsuit

brought by the City of Detroit.

The founders say they are committed

to rectifying the situation,

but blame third-party real estate professionals

for allegedly allowing the buildings to deteriorate.

So far, they've renovated dozens

of the properties listed in the lawsuit.

But while the finger pointing

and legal wrangling continues,

other tenants are still waiting for their homes to be fixed.

Read the full story at WIRED.com.