Inside the Controversy Brewing Over Robinhood’s Tokenized Stocks

OpenAI slammed an unauthorized attempt to tokenize its equity on Wednesday, following a reveal by trading platform Robinhood that it had listed digital stock tokens labeled as “OpenAI” and “SpaceX” earlier in the week.

ChatGPT creator OpenAI pushed back on tokenization on Wednesday, following the reveal by trading platform Robinhood of OpenAI and SpaceX stock tokens on Monday.

In a post on X, OpenAI said the tokens do not represent equity in the company and that it had no involvement in their launch.

“We did not partner with Robinhood, were not involved in this, and do not endorse it,” OpenAI wrote. “Any transfer of OpenAI equity requires our approval—we did not approve any transfer.”

In a response to OpenAI’s post, Elon Musk—CEO of SpaceX and Tesla, and a co-founder of OpenAI—responded bluntly: “Your ‘equity’ is fake.”  Musk parted ways with OpenAI in 2018 after disagreements over the company’s direction and its transition from a nonprofit to a for-profit capped entity.

According to Robinhood, the OpenAI tokenized stocks will launch on the Ethereum layer-2 scaling network, Arbitrum.

In a statement, Robinhood said the tokens give investors “indirect exposure to private markets.”

“To cap off our recent crypto event, we announced a limited stock token giveaway on OpenAI and SpaceX to eligible European customers,” a Robinhood spokesperson said in a statement. “These tokens give retail investors indirect exposure to private markets, opening up access, and are enabled by Robinhood’s ownership stake in a special purpose vehicle.”

As Robinhood explained, stock tokens do not offer many of the same benefits as traditional stocks, such as owning the underlying stock or voting rights.

“When buying stock tokens, you are not buying the actual stocks,” Robinhood wrote. “You are buying tokenized contracts that follow their price, recorded on a blockchain.”

Some investors pushed back on OpenAI’s response, arguing that the tokens still reflect legitimate exposure to the company.

“OpenAI is putting out this statement to be safe because they have to,” investor Amit Kukreja wrote on X. “All Robinhood did was establish a token that tracks the valuation of OpenAI on private markets. You are not literally buying shares in those companies, but shares are just certificates; the digital representation of those assets is all that matters.”

While Robinhood said the price of the stock tokens will be displayed in USD, U.S. customers are barred from buying them due to regulatory restrictions.

“When selling stock tokens, you can always sell them for their value in euros,” Robinhood said. “You cannot send stock tokens to other wallets or platforms at this time.”

Tokenization converts ownership of real-world assets—like stocks, real estate, or artwork—into digital tokens on a blockchain, making them easier to trade or divide. The problem is that OpenAI isn’t a publicly traded company.

Legal quagmire

Kurt Watkins, founder of U.S.-based firm Watkins Legal, told Decrypt the offering would likely be “commercially unviable” in the U.S. due to its lack of transparency and legal ambiguity.

“Robinhood’s OpenAI tokenized equity product would face severe SEC scrutiny in the U.S. due to its fundamentally opaque SPV structure that obscures critical investor protections,” Watkins said. “Crucially, there is no guarantee the tokens will actually track OpenAI’s price since they lack meaningful underlying rights and could face liquidity issues.”

He continued: “OpenAI’s explicit disavowal that these tokens ‘are not OpenAI equity’ and that no transfer was approved exposes the illusory nature of the investment, creating exactly the type of misleading financial product that securities laws are designed to prevent.”

“Even with Robinhood’s disclaimers, this opacity combined with clear Howey Test securities classification would trigger registration requirements demanding far more comprehensive disclosure than currently provided, likely making the product commercially unviable in the U.S. market,” Watkins added.

Criticism has also been levied against the design of Robinhood’s tokenized contracts with Ren, a partner on Electric Capital’s investment team, labeling them a “walled garden.”

“Just decompiled Robinhood’s tokenized stock contracts. It’s a walled garden, every transfer checks a registry of approved wallets (KYC/AML),” Ren tweeted Tuesday.

“It’s unlikely these tokens can interact with DeFi,” he added. “It’s very possible CeFi with distribution just outcompetes existing DeFi protocols.”

In other words, centralized finance—like Robinhood—may gain the upper hand, not because of innovation but because it controls user onboarding and distribution.

Decrypt reached out to Electric Capital for further clarification on those points. Maria Shen, a General Partner at the firm, created a group chat between Ren and Decrypt, but Ren quickly exited without comment. Shen later removed the group, describing the exchange as a miscommunication and that Ren had declined to comment further.

OpenAI and Robinhood declined Decrypt’s requests for comment.

Edited by Sebastian Sinclair, Vince Dioquino contributed to this report.