NFT projects start giving the company’s equity to the holders ‘for free’
Just in time for the holiday season, the founders of the non-binary token (NFT) collective announced that they will be offering equity in the company to NFT holders.
On December 25, Pons Asinorum, the founder of the NFT collection “Plug”, announced that a percentage of the company's shares will be allocated based on the number of unlisted NFTs held by NFTs holders.
On Christmas morning the plague gave me NFT….
Equity (shares) in their company!
Yes, you read that right. Real shares, in our company.
Each frog NFT holder 10 minutes ago will be allocated a percentage of shares based on the number of unlisted frogs… pic.twitter.com/zHVqeq4dyt
— Donkey Bridge (@Pons_ETH) December 25, 2023
Although there appear to be potential legal and regulatory concerns, the founder of NFT says it is legal because the shares have not been sold. The founder said that he had consulted several legal experts on the legality of the move and that holders did not expect to receive shares when they bought NFTs.
Days after the announcement, another founder of a popular NFT group announced a similar move. On January 1, RectGuy co-founder Ovi Farooq, also known as OSF in the NFT space, announced that his NFT holders in his company Rect Brands Inc.
On December 4th, 2023, we announced that Rektguy's holders will receive an amazing snapshot at 12AM EST on October 26th, 2023.
We are pleased to announce that holders of Real Time will be endowed with equity in our company, Rect Brands Inc.
Rekt Brands owns and controls… pic.twitter.com/twPkwrnfvt
— OSF (@osf_rekt) January 1, 2024
The executive said this is a gift to collectors who support Rectig as an art project. Farooq explained that trading NFTs does not provide any equity. The co-founder of RectGuy also stated that this is being done legally. “We are proud of the work we do behind the scenes to achieve this in a meaningful and compliant way.”
According to NFT tracker CryptoSlam, Plug has an all-time sales volume of more than $7 million, while RectGuy has more than $28 million.
RELATED: Original Mickey Mouse Version Becomes Top NFT on OpenSea After Copyright Expires
Members of the community responded to the announcements, discussing whether the moves were “game-changing or just fake.” Wellswash, Azuki's resident researcher, believes this is legal “in some circumstances”.
In both cases, the researcher's eligibility criteria are already met. As Wellswash explained, NFTs are not sold with the express intention of providing equity.
Meanwhile, some expressed hope that other brands would understand the implications. A community member said there could be several ways to implement it and get around real stocks. “The real NFTs/feature is market share: you generate sales and a % goes to a specific owner,” they wrote.
Cointelegraph reached out to Farooq and Pons Asinorum at X for more information, but did not receive an immediate response.
Magazine: Asia Express: Holding the First Digital Yuan Wallet, China's $10B Web3 Fund, Starbucks NFTs
