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Coinbase, Ripple Blast Company Creating Equity Tokens in Their Name

Blockchain startup Swarm announced Wednesday that it was launching new “equity tokens” that would represent equity in notable blockchain startups like Coinbase and Ripple – but those companies have pushed back swiftly against the idea.

The “blockchain for private equity” company published a blog post describing its new token project, with chief executive Philipp Pieper explaining in a statement that the tokens “democratize investing” and allow “any Swarm investor [to] hold equity in some of today’s most prominent tech startups.”

In a statement, a spokesperson for Swarm told CoinDesk that the “tokens are company equity either from vested options or from venture capitalists,” explaining that the equity comes from “approved secondary market transactions to acquire vested employee shares, or from venture capitalists who have directly acquired equity from these companies.”

Yet when reached for comment, representatives for Coinbase and Ripple struck sharply critical tones – and in the case of Coinbase, a cease-and-desist has already been sent, according to Swarm, resulting in an updated announcement that removed all references to Coinbase.

“As a private company, Coinbase does not allow trading of stock on secondary markets for a variety of reasons, including the fact that there is not full and equal information available to the market. We will take appropriate action if we find people have sold Coinbase shares in violation of our agreements not to do so,” Coinbase told CoinDesk in a statement.

Though there’s no indication that a cease-and-desist letter was sent by them, a representative for Ripple issued a similar rebuke.

“We have never spoken to Swarm, don’t have a record of them purchasing Ripple equity and would not have approved a purchase for this purpose,” the rep said.

Image via Shutterstock

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Ethereum Storage Network Swarm Enters Next Test Phase

Swarm, the decentralized storage branch of the ethereum network, has advanced to is third proof-of-concept stage.

Speaking to CoinDesk at Devcon3, swarm lead developer Victor Tron revealed today that the proof-of-concept is now fully compatible with the ethereum client, Geth, and Whisper, the project’s messaging protocol, bringing ethereum one step closer to its “holy trinity” vision, where three systems provide a complete alternative to the World Wide Web.

And in his talk, Tron emphasized how his work fits into the wider vision for ethereum, one in which the storage branch will function much like Dropbox, providing the ability for platform users to store content and create and share folders.

The proof-of-concept is testing also a brand new privacy layer, which Tron said is key to keeping ethereum resistant to the whims of authorities.

He told CoinDesk:

“If you operate it on Swarm, there’s no way for a jurisdiction to take that down because it’s this obfuscation method. Nodes can plausibly deny that they have the content. This is a very important feature because it’s censorship-resistant basically.”

According to Tron, Swarm could pave the way for many “beautiful things,” such as distributed public archives that cannot be shut down or censored.

The proof-of-concept will also stress test what happens to the network once it’s grown to tens of thousands of nodes, what Tron called a scalability test, a hot topic at Devcon this year.

The new version of Swarm is expected to launch sometime after Devcon3.

Test tubes image via Shutterstock

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Swarm Closes $5.5 Million ICO for Alternative Investment Fund

Swarm, a cooperative ownership fund for investment assets, has raised $5.5 million in an initial coin offering (ICO).

Philipp Pieper, a partner at the company, told CoinDesk that 637 contributors took part in the token sale, which was split into two phases. All told, those backing the project gave 18,048 ethers in exchange for 8,171,014 SWM tokens, with almost all of the funding being raised during the pre-sale.

Owners of Swarm Fund tokens can vote now on the way in which their tokens will become liquid on the open market, reflecting a pivot the company made two years ago, to focus on decentralized governance.

Swarm Fund seeks to enable people to buy into investments that they might not be able to otherwise access. In order to make decisions about investments, Swarm designed a voting system that uses the SWM tokens to determine the outcome.

The first test of its voting system is underway now, according to the firm. Token holders have four options to choose from, ranging from large, infrequent distributions to smaller, more frequent ones, according to a blog post describing the vote.

“This is kind of a big deal,” Pieper wrote CoinDesk, “as this directly influences the behavior of the token and it draws in buyers to become ‘active investors’ right away.”

Voting will run through Nov. 6, with token holders ballots being proportional to their overall holdings.

Of the funds gathered, 25 percent of funds raised will be used to support the foundation that will manage the token, with the remainder going toward software development. According to its whitepaper, Swarm’s goal had been to raise $55 million.

The completed sale represents the latest utilization of the blockchain use case this year. CoinDesk’s ICO Tracker shows that more than $2.6 billion has been raised through token offerings to date.

Bee hive image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.