OpenAI and Robinhood Clash Over Tokenized Shares: Key Terms and Investor Implications

On July 3, OpenAI publicly clarified that the Private Company Stock Tokens of OpenAI introduced by Robinhood do not represent equity in the company.

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

The clarification came shortly after Robinhood’s June 30 announcement, where the company revealed plans to give away the first Private Company Stock Tokens for OpenAI and SpaceX to eligible Robinhood EU customers. The tokens were marketed as a way for retail investors to gain exposure to private companies traditionally limited to institutional or accredited investors.

The news quickly circulated on Crypto Twitter (CT), with many community members raising concerns about the legality and structure of the tokens. Some questioned whether Robinhood could face legal consequences for offering tokens tied to high-profile brands without their explicit approval.

David Hoffman, co-founder of Bankless, offered his perspective on the situation. "Vlad [Robinhood CEO] specifically mentioned having a relationship with a wealthy investor with OpenAI or SpaceX shares. These shares could likely still be under the original investor's name (either an individual or an entity), which OpenAI has already approved the original sale," Hoffman explained. "Robinhood and that investor could have a private agreement between each other that OpenAI wouldn‘t need to approve." He noted that, "Still, OpenAI or private companies' resistance to their shares being traded on accessible venues is a real friction for Robinhood."

Robinhood Explains Token Exposure Via SPV, Robinhood CEO Vlad Tenev Says It’s ‘Not Technically Equity’

In response to the growing debate, Robinhood Communications team provided further clarification. "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 (SPV)," the team said.

While Robinhood did not elaborate on the exact structure, it is commonly understood that a special purpose vehicle (SPV) is a legal entity often used to hold specific assets, such as shares in a private company. It is speculated that Robinhood’s SPV might hold actual shares of OpenAI, allowing them to offer tokenized exposure without transferring real equity. However, this interpretation remains unconfirmed by Robinhood, and investors do not directly own OpenAI shares through these tokens. Instead, they are likely purchasing tokens linked to Robinhood's indirect exposure via the SPV. The exact arrangement has not been officially detailed by the company.

Robinhood CEO Vlad Tenev later addressed the issue in a post on X, acknowledging the distinction. "While it is true that they aren’t technically 'equity' (you can see the precise dynamics in our Terms for those interested), the tokens effectively give retail investors exposure to these private assets," he wrote. Tenev further emphasized that this initiative marks the beginning of a broader vision. "Our giveaway plants a seed for something much bigger, and since our announcement, we’ve been hearing from many private companies eager to join us in the tokenization revolution."

Key Terms and Limitations

According to the Private Stock Giveaway Terms on Robinhood’s website, eligible customers will receive €5 worth of stock tokens related to either OpenAI Global LLC ("OpenAI") or Space Exploration Technologies Corp. ("SpaceX").

The terms clearly define that these “stock tokens” are financial derivative contracts between the user and Robinhood. These contracts reference certain stocks of private companies, referred to as the Underlying Private Stock Assets. The stock tokens do not entitle holders to any direct ownership or rights to the underlying shares. Their value is derived from the performance of the referenced private company shares.

Importantly, the stock tokens are linked to private, unlisted stocks that are not actively traded. As of the date of the promotion, these Private Stock Tokens cannot be redeemed with Robinhood, sold back to Robinhood, transferred off-platform, or otherwise traded unless Robinhood chooses to enable such functionality in the future at its sole discretion.

While stock tokens offered by Robinhood are generally backed 1:1 by shares of the associated stock held by the company, Robinhood does not guarantee that its hedged exposure for these Private Stock Tokens will be maintained at a 1:1 ratio with the underlying assets. Holders also do not have any right to redeem or claim the actual underlying stock or any equivalent position.

Instead, the only right granted is the ability to sell the Private Stock Tokens back to Robinhood at a later date, should Robinhood make this option available in the future.

Moving Forward

Robinhood’s Private Company Stock Tokens offer retail investors a new form of exposure to private companies, but key limitations and OpenAI’s clarification highlight the need for careful understanding of what these tokens actually represent. Further developments may shape how such products are received and regulated moving forward.