The article exposes RealT's acquisition of hundreds of properties in Detroit under the guise of tokenized real estate, issuing cryptocurrency tokens starting at $50, claiming to achieve investment democratization; however, in actual operations, neglect led to issues like leaking roofs, fires, and collapses, resulting in a harsh living environment for tenants and hundreds of municipal violations and lawsuits; the founders, the Jacobson brothers, evaded responsibility and were frequently involved in related transactions, ultimately leading to a collapse of trust, with the project becoming a failed case interwoven with financial illusions and real decay.

Article Author, Compiler: Joel Khalili, Luffy

Source: Foresight News

In 2019, two Canadian brothers used cryptocurrency to split properties into 'tokens priced at only $50 each,' creating a real estate empire in Detroit that boasts hundreds of properties and attracts tens of thousands of investors from around the globe. They claimed to use blockchain to 'make everyone a landlord,' promising high returns, with tokens once selling out rapidly. But beneath the glossy crypto narrative is the collapse of the real world: houses leaking, moldy, burning, collapsing, tenants struggling in dangerous environments, and the government issuing hundreds of fines for violations, with parties pointing fingers at each other. Ultimately leading to lawsuits and a breakdown of trust, a seemingly innovative financial experiment has turned into a complete disaster.

Reporter Joel Khalili from Wired restored the rise and fall of the RealT crypto myth through on-the-ground investigations, revealing the harsh reality of tokenized real estate: no matter how perfect it is on-chain, it cannot cover up the rot off-chain.

The following is the Chinese translation of Joel Khalili's report:

$50 to become a landlord: the utopian lie of crypto real estate.

I walked up a wooden staircase leading to the basement of a duplex built in the 1920s in Detroit's East Side. A smell hit me, a mix of damp brick walls, standing water, mold, and bleach. In front of me was Cornell Dorris, who had lived here for nearly ten years. Dorris, in his forties, has two daughters who visit him on weekends. He makes a living by cooking smoked meats and catering events.

As my eyes adjusted to the darkness, I could see mouse droppings on the ground and a pool of black water spreading across the entire basement floor. 'When it rains, the water just floods in,' Dorris said. The air was oppressively heavy, and I felt an intense urge to leave immediately.

Dorris's landlord is not an ordinary person. About four years ago, the building was acquired by a startup called RealToken (abbreviated as RealT). The company had an ambitious plan: to use cryptocurrency technology to 'democratize real estate investment.' The idea is that a property can be divided into thousands of crypto tokens, each selling for about $50. Token holders can receive a portion of the rent from the property, with annual returns of up to 12%. They can also profit from property appreciation.

Investors were flocking to the concept, and RealT expanded massively in Detroit, acquiring about 500 buildings all at once. Additionally, they purchased approximately 200 properties in over 40 other cities across the Americas, bringing the total value of their asset portfolio to around $150 million. Due to regulatory reasons, U.S. residents were not allowed to participate in investments, but at least 16,000 people from 150 countries had already purchased RealT tokens. Despite the difficulty in obtaining reliable data, RealT has claimed, 'By all metrics, we are the world's largest real estate tokenization platform.'

The basement of the duplex where Cornell Dorris lives was flooded.

However, despite RealT's success in the crypto space, it has faced continuous troubles in the real world. Last summer, the Detroit city government sued RealT and its founders, accusing them of 'hundreds of violations of environmental health regulations.' The place where Dorris lives is one of many identified by municipal inspectors as unfit for habitation. He told me that although previous landlords were not perfect and sometimes had him arrange repairs, the condition of the building has noticeably deteriorated since RealT took over. Inspectors found missing smoke detectors and no hot water in the bathtub. 'Now I can only stand by the sink to take a shower,' Dorris said. 'There are mice downstairs, and squirrels upstairs.'

According to Zillow's estimates, the total size of the U.S. real estate market is $55 trillion, with tokenized real estate accounting for a minuscule proportion. However, according to Deutsche Bank, the concept of using cryptocurrency to purchase fractional assets has grown into a $30 billion industry in just a few years. Yet in Detroit, the vision of becoming a landlord for a small amount of money clashes with the inconvenient realities of the houses themselves and their residents.

The front and side windows of the house at 8821 Prairie Street are missing, the porch steps have collapsed, and the panels have warped.

Rémy and Jean-Marc Jacobson, the Canadian brothers, founded RealT. They are not twins, but they look very similar, both wearing glasses, with slicked-back hair and graying beards. Both describe themselves as staunch libertarians, supporting free markets and minimizing government intervention. When we met on Zoom, Jean-Marc was enthusiastic but sometimes slightly sharp. I tried to ask a question delicately, but he told me, 'Just ask directly.'

The Jacobson brothers grew up in Canada and Europe in a family filled with stories and lawsuits worldwide. One of their sisters had a highly publicized divorce that eventually turned into a battle for a multi-million dollar fortune, which had previously been seized in the Bahamas, and the sister won. Their brother-in-law was sentenced to probation for connections to a gang involved in the illegal sale of weapons to Angola. Their father was a financier who, in 2003, responded to a reporter's question about the family wealth with, 'Don't ask, and I won't hide.'

Rémy and Jean-Marc said their real estate careers began with renovating and reselling properties in Quebec and parts of the United States. Then, in the early 2010s, they were introduced to Bitcoin. Almost immediately, they launched their own Bitcoin mining business, followed by several other companies and a nonprofit organization. The brothers have also been involved in Bitcoin-related troubles; they fell victim to a Ponzi scheme and settled with a client who accused their company of withholding millions in cryptocurrency.

According to Jean-Marc, as early as 2013, the Jacobson brothers began to think about how to combine their expertise in real estate and cryptocurrency. In traditional finance, people can invest in real estate investment trusts (REITs) to receive a portion of rental income from a bundle of properties. But this usually means investing thousands of dollars at a minimum. The brothers had been looking for a way to build a similar product using cryptocurrency, but allowing investments at much lower amounts. It wasn't until five years later, when Rémy received a call from a lawyer, that they found a breakthrough.

Typically, it is impossible to sell a house to a thousand people. But if the Jacobson brothers transfer property ownership to a limited liability company (LLC), they can create and sell crypto tokens representing shares in that company.

The Jacobson brothers began searching for locations to test their tokenization concept. Detroit, known for its low property prices and ambitious urban renewal plans, was clearly their ideal choice. 'Detroit is a city that has just recovered from bankruptcy; it is on the path to recovery,' Jean-Marc said. 'It naturally became a potential growth point for value. Most importantly, it's also suitable for beautifying and improving the community environment.'

They bought their first property—a typical single-family home at 9943 Marlowe Street in West Detroit. In April 2019, they tokenized it, issuing 1,000 tokens, with the proceeds used to cover various expenses and repairs as well as a 10% commission for the Jacobson brothers. They also planned to take 2% from future rental income, with the remaining rent going to pay for maintenance, taxes, and other expenses, and the rest distributed to token holders.

Jean-Marc told me that on the first day of the transaction, RealT sold less than five tokens. The brothers asked friends and family to buy in and tried to promote it on X, Medium, and through media interviews. 'At first, people were very skeptical,' Jean-Marc said. 'We sold very, very, very little.' About five months later, the Jacobson brothers considered selling the house, refunding the token holders, and then stepping back.

However, the tokens for the house at 9943 Marlowe Street slowly started to sell. By December 13, they were all sold out. At that time, the property had 107 investors from 33 countries, each holding an average of 0.93% equity, sharing a daily rental income of $25.22.

The Jacobson brothers created a chat group on Telegram for French-speaking investors, and demand for RealT tokens began to soar. In 2020, RealT expanded wildly in Detroit: they tokenized an apartment building on Appoline Street, a four-plex on Schaefer Street, and then a single-family home on Mansfield Street. That year, they tokenized nearly 50 properties.

As they planned to expand further in Detroit, the brothers collaborated with real estate professional Shawn Reed. According to court documents, Reed started looking for properties for RealT, sometimes even assisting with renovations so that RealT could tokenize them. The Jacobson brothers were unaware that Reed had a shady past: he had been imprisoned for bank fraud and was referred to as 'the slumlord.' The deals he facilitated helped RealT keep up with the soaring demand for tokens at the time.

I interviewed an investor on Telegram who goes by TokNist, who said that when he first heard about RealT, he immediately understood the model. This French citizen living in Asia had always wanted to buy real estate but couldn't get a loan. RealT provided a way to invest small amounts without bank involvement. 'Many people are like me,' TokNist said. 'They're not wealthy speculators. They're just ordinary people who want to own part of a property and secure fixed income.'

In 2022, TokNist began buying up RealT tokens in large quantities. The process wasn't smooth. Whenever RealT was about to launch a new property, he would be sitting at his computer, watching the countdown. The website often crashed, the screen would go blank, or the tokens would disappear from the shopping cart. 'The property tokens sold out instantly. There could be six or seven properties going live in the same day, and minutes later, all the tokens would be gone,' TokNist told me. 'That shows the demand is really high.'

Behind the scenes, the Jacobson brothers began to encounter problems managing an ever-expanding property portfolio. In 2023, a bank canceled the brothers' redemption rights on a commercial property they owned in Miami, Florida, due to loan defaults, and they were ordered to pay $10.4 million. The Miami city government also happened to declare the property an unsafe building. (The Jacobson brothers described this experience as a strategic decision made in light of the COVID-19 pandemic, an exception in their Florida business record.) That same year, the Chicago city government issued fines to several LLCs under RealT, accusing them of having dilapidated houses, violating building codes, and defaulting on debts. This was an early signal that trouble was coming to Detroit.

Decay, fires, and abandoned tenants: the empire began to crumble.

In the summer of 2024, Aaron Mondry was looking for new reporting leads. As a reporter for the nonprofit local news organization Outlier Media, Mondry was writing a series of articles titled 'The Speculators of Detroit,' focusing on the city’s real estate market. Subsequently, a tipster pointed out to him a strange pattern in the property records in Wayne County, Michigan.

While reviewing records, Mondry found that a large number of Detroit properties were held by LLCs with names containing 'RealToken.' By that time, through these numerous LLC subsidiaries, RealT had already purchased and tokenized hundreds of properties in Detroit, becoming one of the city's largest landlords. Many of these properties were single-family homes, which RealT acquired through bulk deals with other landlords, sometimes without even personally viewing the houses. RealT's properties were concentrated in low-income, predominantly Black neighborhoods in the East and West sides of Detroit.

Mondry compiled a list of RealT properties and began knocking on doors. Soon, he noticed a shocking pattern: many of the houses he visited were in terrible condition, a large number appeared to be vacant, and after querying various databases, he found that multiple properties had long overdue property taxes.

In February 2025, Mondry published the first article in a series about RealT, based on public records and conversations with tenants. These reports accused RealT of widespread mismanagement, cutting corners, and neglecting tenants, with some tenants telling Mondry they lived in filthy and harsh conditions. Around the same time, municipal building inspectors warned RealT that a smoke detector, emergency lighting, and fire doors were non-functional in an apartment building on Cadieux Road. In March, a fire swept through the building.

Since the fire at 10410 Cadieux Street in March 2025, the apartment building has been vacant, with the charred remains boarded up.

In early September 2025, when I was going door to door, I heard similar descriptions. I was driving a rental car, passing basketball hoops weighed down by lumps of coal, smelling barbecued food and music drifting from behind fences—these joyful fragments of daily life starkly contrasted with the terrible conditions of the RealT properties I saw in the community.

I parked in front of an apartment building on Cadieux Road and found that the charred remains had been boarded up. In the Grand River-St. Marys neighborhood in the northwest, a group claiming to be a gang said they had taken control of 14881 Greenfield Street, a two-story brick apartment building with a striking red awning. In a YouTube video, the group claimed to be renting out these dilapidated units as landlords. 'For an addict, this is like a five-star hotel,' one interviewee said. The other two RealT houses I visited were riddled with bullet holes. Multiple tenants told me they were refusing to pay rent, hoping to force the landlord to make repairs.

In a Tim Hortons coffee shop in Redford, Detroit's west side, I met Maya, a tenant of RealT, who lives in a nearby rectangular red brick house. Whenever Maya comes home, she parks her car in the driveway and sometimes sits in the car for almost an hour before entering the house. One of the bedrooms has a leaky ceiling, leaving a large hole exposing the wooden roof support structure. The paint is peeling, and damp, yellowed insulation fragments hang down into the bedroom. Maya only dares to stay in the bathroom, kitchen, and living room, where she sleeps on the couch. 'To be honest, I probably shouldn't be living here, but I'm trying to find a place to stay,' Maya said. 'This place is just a slum.'

A few blocks from Maya's place, I knocked on Monica's door. She lives in a house just south of the famous Eight Mile Road and has lived there for six years, recently with two grandchildren. The tokens for this house are held by 331 people, who receive an average annualized investment return of 9.3% from the rent Monica pays. Monica told me the heating is broken, and the water supply is unstable—I could see some broken windows and a damaged roof. A long-dead tree stood in the front yard. At night, Monica couldn't sleep for fear of someone breaking in through the broken windows. 'Go home, dear. Go home,' Monica told me. 'It's too scary here.'

The ceiling at 18415 Fielding Street has collapsed, and the hallway is filled with blocks of plaster and damp insulation.

Lawsuits, finger-pointing, and the collapse of trust: the tokenization experiment spiraled completely out of control.

On the fifth floor of the Coleman A. Young Municipal Center, amid a maze of beige tiles and worn carpets, I found Conrad Mallett, who oversees all civil litigation in the city. Portraits of Muhammad Ali and prominent figures from the civil rights movement hung on the walls of his office. Mallett, who previously served as Detroit's deputy mayor and the chief justice of the Michigan Supreme Court, noticed Outlier Media's reporting on RealT last spring. He launched an investigation. Building inspectors evaluated the properties, documenting violations. 'The results found thousands of non-compliant houses,' Mallett told me. 'We concluded that, in the vast majority of cases, people were living in substandard housing.'

Tamara York Cook, Mallett's deputy, sent building inspectors door to door, putting her business cards on front doors. Soon, her phone started ringing off the hook. 'Most people are very eager to tell their stories,' she said.

In July, the city government filed a civil lawsuit against RealT, its founders, and 165 related LLCs, accusing them of committing hundreds of public nuisance and regulatory violations and defaulting on hundreds of thousands of dollars in fines for dilapidated houses and property taxes. The lawsuit stated that 408 properties did not have municipal certificates of occupancy. The Jacobson brothers told Wired, 'In terms of compliance certificates, the tokenized asset portfolio of RealT is no different from other properties in the relevant postal code area.'

Soon after, a judge issued a temporary restraining order prohibiting RealT from collecting rent or evicting tenants on these Detroit properties until they met standards. The order was later extended but relaxed to allow RealT to evict tenants who refused to pay rent.

On Telegram, some investors heard the news of the lawsuit, and Rémy Jacobson immediately stepped in to reassure them. Besides the information from the Jacobson brothers, RealT investors had little way to understand the real situation in Detroit. 'We are committed to resolving all issues,' Rémy said. 21 investors responded with heart emojis. Jean-Marc also chimed in, heavily promoting the rapid growth of the Detroit real estate market.

Around the same time, the Jacobson brothers informed investors that a potential buyer had shown interest in the building where Cornell Dorris lives—the one with the flooded basement. If investors agreed to sell, they would receive a total return of up to 75.61%. In a Telegram post, Jean-Marc described this transaction as proof of the vibrancy of the Detroit real estate market and RealT's trading skills. At the end of July, during a call with RealT investors, Jean-Marc announced that this property transaction 'has been completed.'

The registered address of the buyer, East Coast Servicing LLC, is the same as the Michigan address used by RealT in documents. The documents were signed by Rémy Jacobson on behalf of the buyer. The Jacobson brothers appear to have completed the transaction with another company they controlled.

After I followed up to verify this transaction, in February 2026, the Jacobson brothers sent an email to investors saying the buyer had backed out, although they had previously stated in July that the property 'was sold.' The brothers later told Wired that East Coast Servicing LLC was merely a tool they used to assist in selling the property to foreign buyers.

The core argument presented by the Detroit city government in its lawsuit against RealT is that the company's business model inherently includes components of neglecting property maintenance. 'The way they generate annualized returns is by not maintaining the houses to high-quality standards,' Mallett alleged.

Jean-Marc Jacobson denies this accusation. He claims their original intention has always been to beautify the Detroit community by allowing more people to invest. He said that when RealT tokenizes a property, a fund is established for maintenance. The Jacobson brothers pointed out that for investors to achieve substantial returns, the properties must continuously be rented out and generate considerable rental income, and neglecting maintenance would make all of that impossible.

He claims that the property management company and other real estate professionals failed to manage the property or otherwise deceived RealT. The company has already sued several defendants, including Shawn Reed.

On the morning of September 3, I met Reed in the lobby of a fancy hotel, The Henry, a few miles west of Detroit. I found him sitting in a brown leather armchair under a crystal chandelier, with the flickering flames of an electric fireplace behind him. He was bald, with a long black beard, and dressed in cowboy boots, making quite an impression. While we talked, he stroked his beard with his fingers.

By that time, the relationship between Reed and the Jacobson brothers had deteriorated. According to court documents, by 2024, they began arguing over the details of certain property transactions. They then clashed over issues related to property renovations. Eventually, they ceased cooperation. The Jacobson brothers then sued Reed, accusing him of fraudulent misrepresentation.

In a lawsuit filed in February 2025 in Michigan court, RealT accused Reed of issuing bills for repairs and renovations that were never done. Reed denied these accusations. He claimed that his role was merely to assist with the renovation of a few RealT properties, not to manage the entire asset portfolio on a daily basis. In June of the same year, he filed a counterclaim, accusing RealT of attempting to scapegoat him, falsely claiming he was responsible for the chaos in Detroit. 'I have never been a property manager. That has never been my job,' he told me. The lawsuit is still ongoing.

In the interview, Jean-Marc refused to discuss Reed specifically but told me, 'Sometimes, when you enter a new city, you initially meet all the wrong people... No one can say they won't encounter a fraudster.'

When the dispute with Reed went to court, the Jacobson brothers had already established New Detroit Property Management. The brothers handed over the management of RealT's Detroit asset portfolio to this new company and appointed experienced property manager Salvatore Palazzolo as vice president. On my last day in the city, Palazzolo picked me up outside the hotel in a black SUV, with a small cross hanging from the rearview mirror. He was eager to show me the recently renovated RealT properties his team had worked on.

While driving, Palazzolo explained that his task was to identify vacant properties that required only minor renovations to quickly rent out and start generating income. Meanwhile, the city government continued to issue fines for dilapidated houses, which Palazzolo said meant pulling construction crews away from renovation work. 'You have to understand how many properties we have,' Palazzolo said. 'The city government is crazy about issuing us fines; the workload is overwhelming, really overwhelming.'

Even after the renovations were completed by New Detroit, problems persisted. In at least one case, someone impersonated a landlord, collected a one-time fee, and arranged for someone to move into a renovated RealT property. The Jacobson brothers said this impersonator tried to exploit the court's stay on eviction proceedings, suggesting to the prospective tenant that as long as they paid a small amount to the city government's escrow account, they wouldn't be evicted.

Palazzolo and I parked in front of the first property: a small red brick house with a gabled roof and white trim. Palazzolo held a black folder under his arm, showing me around the house and pointing out the repairs he had arranged.

14574 Strathmoor Street, one of the RealToken properties renovated by New Detroit Property Management.

The bathroom and kitchen have been remodeled, the collapsed awning has been restored, and the floors have been polished.

He took me to see another five houses in similar condition. They weren't luxurious, but they looked clean and livable.

Palazzolo estimates that by that time, New Detroit had renovated about 40 houses for RealT. According to recent court documents, the company has obtained compliance certificates for 28 properties involved in the lawsuit. 'I think people don't realize how bad some of these properties are. Restoring them to qualifying standards requires a lot of work,' Palazzolo said. 'We're really working hard to make them safe and affordable.'

Jean-Marc Jacobson admitted that the condition of the Detroit properties is 'terrible,' but he also criticized the parties exposing the issues with RealT. Throughout the summer, he communicated weekly with French-speaking investors on Telegram, repeatedly belittling local journalist Mondry. 'Clearly, this reporter doesn't like us. We knew that months ago. Obviously, he only writes what he chooses to write, ignoring all opposing evidence for a 'surface analysis,' and pursuing a 'targeted narrative.' Last September, Jean-Marc told investors he believed the city's lawsuit was the product of 'administrative corruption, political agendas, backroom deals, and abuse of power.'

On Telegram, token investors occasionally questioned the validity of city government cases or Outlier Media's reports. Recently, someone suggested that RealT should have conducted background checks on the property management company. Jean-Marc responded, 'You seem to enjoy venting your hatred.' In another Telegram message, Jean-Marc seemed to mock a tenant. 'Emergency alert!!! My faucet is broken!!! Emergency alert!!! 🆘' he wrote. The three RealT token holders I interviewed all described the Telegram community as hostile. The Jacobson brothers denied that the atmosphere in the Telegram group was hostile; they claimed that it is normal for tension to arise within the investor community during difficult times.

Nevertheless, investors began to pose increasingly pointed questions to the Jacobson brothers. In September, investors discovered documents from 2023 that they believed showed RealT had secured a $950,000 mortgage just months after tokenizing two properties in Chicago. One investor called it 'very suspicious,' as this would put token holders at risk of losing the property in case of loan defaults. Jean-Marc claimed that securing the mortgage was to help the seller, who would benefit in an unspecified way. He stated that these mortgages have now been paid off. 'Sometimes you need to do some company-level operations,' Jean-Marc told investors. 'If we want to make a deal, sometimes we need to show a bit of flexibility.' Tomasz Piskorski, a real estate professor at Columbia Business School, said that the arrangement Jean-Marc described is not normal. 'I don't see a reasonable justification. There might be one, but I'm not clear.'

In late November, investors began questioning a RealT property in Chicago: it had been deemed dangerous by the city government months ago and was slated for demolition, yet it was still generating rental income for token holders, indicating someone was living there. 'I really don't know what to think anymore,' one RealT investor said on Telegram. I encountered similar situations in Detroit as well. The 13 properties I visited last September that appeared vacant were all marked as 'fully rented' on the website. The apartment building allegedly occupied by a suspected gang was the same. The Jacobson brothers stated that the escrow system set up by the city of Detroit disrupted their ability to verify occupancy.

Some RealT investors expressed feeling betrayed by the Jacobson brothers. One told me he had stopped buying RealT tokens until the Detroit disputes were resolved. Asian-based investor TokNist expressed doubts about the Jacobson brothers' management. Another investor, who goes by the name 'Demetrius Flenory' on a Q&A platform, wrote to the Jacobson brothers: 'Our tokens were supposed to support innovation and democratize real estate investment, yet they are associated with unsanitary and dangerous properties, exacerbating the social plight of these vulnerable communities... We cannot turn a blind eye to the new scandals that erupt every week.'

That Shawn Reed, who claimed not to be a property manager, also publicly criticized last year, posting a video on X showing a dilapidated building he claimed belonged to RealT. In one room, a dirty mattress lay on the floor; in the adjacent room, food containers and other trash piled high. 'If I held the tokens for this building, I would be furious,' Reed said off-camera. However, by that time, Reed had joined another tokenized real estate company.

In February, the Jacobson brothers told investors they planned to sell a large number of properties from the RealT portfolio, aiming to 'optimize overall investor returns.' However, to free up funds to restore the houses to sellable condition, investors would no longer receive any rental income, regardless of where their properties were located. Some investors defended this decision, but others were furious; they questioned on Telegram why the Jacobson brothers could unilaterally decide to stop paying rent on the properties they owned. The Jacobson brothers stated that this operation is permitted under RealT's terms, and as directors, they have the authority to decide whether to distribute rental income, but some investors equated it to 'theft.'

The trial in Detroit is scheduled to begin in May. Other legal disputes involving RealT are still ongoing. While trying to push its properties to market, the company seems to be implementing a new strategy in a new country. RealT is now selling tokens for 'under construction' properties in Colombia and Panama, with investors essentially crowdfunding the building projects, hoping for high returns in the future. 'The under construction projects greatly utilize the concept of tokenization,' Jean-Marc told me in an interview. 'It has very bright potential.' But investors don't seem to believe so; these tokens were listed months ago, yet thousands remain unsold.