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60 sats \ 5 replies \ @grayruby 16h \ parent \ on: Robinhood Announces Stock Tokens, The Robinhood Chain and other news Stacker_Stocks
How does the token give you legal right to the underlying equity? How do I exercise that legal right when there is some hack?
To me it is just price exposure.
You've never had legal right to the underlying equity. Even on the traditional stock market, the shares are vested in the name of the Depository Trust Company.
All you own is a fancy IOU
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You have no legal claim to securities in bankruptcy. There is already legal precedent established.
The Great Taking -David Rogers Webb
"The new safe harbor regime was cemented into case law with the court
proceedings around the bankruptcy of Lehman Brothers. In the lead-up
to the failure, JP Morgan (JPM) had taken client assets as a secured
creditor while being the custodian for these client assets! Under longstanding bankruptcy law this would clearly have been a constructively
fraudulent preference transfer benefitting an insider. And so, JPM was
sued by clients whose assets were taken.
I will cite the following memorandum filed in defense of JPM by the law
firm Wachtel, Lipton, Rosen & Katz, with the U.S. Bankruptcy court of
the Southern District of New York [22]:
The purpose of the safe harbors, from their inception, has been
to promote stability in large and inherently unstable financial
markets by protecting transactions in those markets from being
disturbed during a bankruptcy. As explained in the legislative
history of the original safe harbor, “the financial stability of the
clearing houses, with often millions of dollars at their disposal,
would be severely threatened by” exposure to avoidance claims; as
well, actions to avoid margin payments made by clearing houses
could set off a “chain reaction” of insolvencies among all other
market participants, “threatening the entire industry.”
Now here is the decision of the court [23] :
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF
NEW YORK In re: Chapter 11 Case No. 08-13555
The Court agrees with JPMC that the safe harbors apply here,...
These are questions that weren’t 100% clear in the presentation. To mee it seems like they are trying to create De-Fi liquidity to trade outside of tradfi markets.
So wouldn’t call it real innovation plus it’s all still dollar based it’s not based on sats or some other shitcoin token.
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