Written by: Joel Khalili

Translated by: Luffy, Foresight News

In 2019, two Canadian brothers leveraged cryptocurrency to split a property into "tokens costing only $50 each," creating a real estate empire in Detroit that boasted hundreds of properties and attracted tens of thousands of global investors. They claimed to democratize real estate investment with blockchain, promising exceptionally high returns, and the tokens were once snapped up in a frenzy. However, beneath the glamorous crypto narrative lay an unraveling reality: leaking roofs, mold, fires, collapses, tenants struggling in dangerous conditions, and the city issuing hundreds of code violations, with all parties pointing fingers at each other. The situation ultimately led to lawsuits and a breakdown of trust; what seemed like an innovative financial experiment turned into a disaster.

Wired magazine journalist Joel Khalili retells the rise and fall of the RealT crypto myth through field investigations, uncovering the harsh reality of tokenized real estate: No matter how perfect the blockchain is, it cannot cover up the decay of the real world.

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

$50 to Become a Landlord: The Utopian Lie of Crypto Real Estate

I walk down a wooden staircase leading to the basement of a duplex built in the 1920s in East Detroit, Michigan. A smell hits me, mingling moist brick walls, stagnant water, mold, and bleach. In front of me is Cornell Dorris, who has lived here for nearly a decade. In his early forties, Dorris has two daughters who visit him on weekends. He makes a living by smoking meat and catering events.

Once my eyes adjusted to the dim light, I noticed mouse droppings on the floor, and a pool of black stagnant water spreading across the entire basement. “When it rains, the water just comes in,” Dorris said. The air was unsettlingly heavy, and an intense urge to leave flooded over me.

Dorris's landlord is not an ordinary person. About four years ago, this building was acquired by a startup called RealToken (abbreviated as RealT). The company had an ambitious plan: to "democratize real estate investment" using cryptocurrency technology. The idea was to split a property into thousands of crypto tokens, each priced around $50. Token holders could earn a share of the rental income from the property, with an annual return of up to 12%. They could also profit from property appreciation.

Investors flocked to this concept, and RealT aggressively expanded in Detroit, purchasing about 500 buildings in one go. Additionally, they acquired about 200 properties in over 40 other cities across the Americas, bringing their asset portfolio's total value to around $150 million. For regulatory reasons, U.S. residents were barred from participating, but at least 16,000 people from 150 countries had already purchased RealT tokens. Although it was hard to obtain reliable data, RealT claimed to be "the world's largest real estate tokenization platform by all metrics."

The basement of the duplex where Cornell Dorris lives is flooded

However, despite RealT's great success in the crypto realm, it faced persistent troubles in the real world. Last summer, the Detroit city government sued RealT and its founders, accusing them of "hundreds of violations of health and safety regulations." Dorris's residence is one of many homes deemed uninhabitable by municipal inspectors. He told me that while previous landlords were not perfect and sometimes had him arrange repairs himself, the building’s condition had clearly worsened 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, the U.S. real estate market is estimated to be worth $55 trillion, with tokenized real estate making up a tiny fraction of it. However, Deutsche Bank reported that in just a few years, the concept of purchasing property fragments with cryptocurrency has grown into a $30 billion industry. Yet in Detroit, the vision of becoming a landlord with a small amount of money conflicted with the actual existence of inconvenient conditions of the houses and their residents.

The windows on the front and sides of the house at 8821 Prairie Street are missing, the porch steps have collapsed, and the siding has warped

Rémy and Jean‑Marc Jacobson, the Canadian brothers who founded RealT, are not twins but look very similar, both wearing glasses, slicked-back hair, and sporting graying beards. Both describe themselves as staunch libertarians, supporting the free market and aiming for minimal government intervention. When we met on Zoom, Jean‑Marc was enthusiastic but sometimes a bit sharp. I tried to delicately ask a question, speaking around it, but he told me, "Just ask directly."

The Jacobson brothers grew up in Canada and parts of Europe in a family filled with stories and lawsuits across the globe. One sister's divorce became notorious, ultimately escalating into a battle over millions of dollars of wealth that had previously been seized in the Bahamas, and she eventually won the case. Their brother-in-law was sentenced to probation for ties to a gang selling weapons illegally to Angola. Their father was a financier, and in 2003, when a reporter inquired about the family wealth, the response was, "Don’t ask, and I won’t hide anything."

Rémy and Jean‑Marc stated that their real estate careers began by renovating and reselling properties in Quebec and parts of the U.S. In the early 2010s, they encountered Bitcoin. Almost immediately, they started their own Bitcoin mining business and subsequently founded several other companies and a non-profit organization. The brothers also encountered troubles related to Bitcoin; they got caught in a Ponzi scheme and reached a settlement with a client accusing them of withholding millions worth of crypto.

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 could invest in real estate investment trusts (REITs) to earn a share of rental income from a portfolio of properties. But this usually meant investing thousands of dollars. The brothers were looking for a way to build similar products with cryptocurrency that would allow much smaller investments. It wasn't until five years later that Rémy received a call from a lawyer, and they found a breakthrough.

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

The Jacobson brothers began looking for locations to test their tokenization concept. With its low property prices and ambitious urban renewal plans, Detroit was clearly an ideal choice for them. "Detroit is a city that has just recovered from bankruptcy, and it is on the road to recovery," Jean‑Marc said. "It naturally became a potential point for value growth. Most importantly, it also suited the beautification and improvement of community environments."

They purchased their first property—a modest single-family home at 9943 Marlowe Street in West Detroit. In April 2019, they tokenized it, issuing 1,000 tokens, and the revenue from the token sales was used to pay 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 used for maintenance, taxes, and other expenses, and the leftover distributed to the token holders.

Jean‑Marc told me that on the first day of trading, RealT sold less than five tokens. The brothers asked friends and family to buy in, trying to promote the tokens on social media platforms like X, Medium, and through media interviews. "At first, people were very skeptical," Jean‑Marc said. "We were selling very, very, very little." About five months later, the Jacobson brothers considered selling the house, refunding the people who had purchased tokens, and stepping back from the venture.

However, the tokens for 9943 Marlowe Street slowly started to sell. By December 13, they were sold out. At that time, the property had 107 investors from 33 countries, with an average holding of 0.93% of the shares, collectively sharing $25.22 in rental income per day.

The Jacobson brothers created a chat group on Telegram for French investors, and demand for RealT tokens began to soar. In 2020, RealT expanded rapidly in Detroit: they tokenized an apartment building on Appoline Street, a fourplex 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 partnered with real estate professional Shawn Reed. According to court documents, Reed began searching for properties for RealT and sometimes even assisted in renovations for tokenization. The Jacobson brothers did not know that Reed had a disreputable past: he had been imprisoned for bank fraud and was referred to as a "slumlord." The transactions he facilitated helped RealT keep up with the skyrocketing demand for tokens at the time.

I interviewed an investor who went by the screen name TokNist on Telegram; he said he immediately understood the model when he first heard about RealT. The French citizen living in Asia had always wanted to buy real estate but couldn’t get bank loans. RealT offered a way to invest without a bank and for small amounts. "Many people are like me," TokNist said. "They are not wealthy speculators. They are just ordinary people who want a piece of real estate and want fixed income."

In 2022, TokNist began buying RealT tokens in large quantities. The process was not smooth. Every time RealT would launch a new property, he would sit in front of his computer, watching the countdown. The website frequently crashed, screens went blank, or tokens disappeared from the shopping cart. "The property tokens sold out instantly. There might be six or seven properties launching in a day, and minutes later, all the tokens were gone," TokNist told me. "This showed that the demand was really high."

Behind the scenes, the Jacobson brothers began to encounter issues managing their ever-expanding property portfolio. In 2023, a bank canceled their redemption rights on a commercial property they owned in Miami, Florida, because they had defaulted on loans and were ordered to pay $10.4 million. The Miami city government also designated that property as unsafe. (The Jacobson brothers described this experience as a strategic decision made in light of the COVID-19 pandemic, marking 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 deteriorated properties, violating building codes, and defaulting on debts. This was an early signal of trouble looming in Detroit.

Deterioration, Fires, and Abandoned Tenants: The Empire Begins to Crumble

In the summer of 2024, Aaron Mondry was looking for new reporting leads. As a journalist for the non-profit local news organization Outlier Media, Mondry was writing a series titled "Speculators in Detroit," focusing on the city’s real estate market. Subsequently, a tipster pointed out a strange pattern in the property records of Wayne County, Michigan.

While sifting through the records, Mondry discovered that many Detroit properties were owned by LLCs with "RealToken" in their names. By that point, 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 that RealT acquired through bulk transactions with other landlords, sometimes without even viewing the homes in person. RealT's properties were concentrated in low-income, predominantly Black neighborhoods in East and West Detroit.

Mondry compiled a list of RealT properties and began going door to door. Soon, he noticed a shocking pattern: many of the houses he visited were in very poor condition, with numerous homes seemingly vacant, and upon checking various databases, he found that many properties had long overdue property taxes.

In February 2025, Mondry published the first article in the 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 deteriorating conditions. Around the same time, municipal building inspectors warned RealT that an apartment building on Cadieux Road had non-functional smoke detectors, emergency lighting, and fire doors. In March, a fire swept through the building.

Since the fire at 10410 Cadieux Street in March 2025, this apartment building has remained vacant, its charred remains boarded up

In early September 2025, as I knocked on doors one by one, I heard similar descriptions. I drove a rented car, passing basketball hoops weighed down with chunks of coal, smelling barbecues and music wafting over from behind fences — these joyful snippets of daily life starkly contrasted with the dismal state of RealT properties I observed in the community.

I parked in front of the apartment building on Cadieux Road and saw that the charred remains had been boarded up. In the northwest Grand River-St. Marys community, a gang that claimed to be in control of 14881 Greenfield Street, a two-story brick apartment building with a prominent red awning. In a YouTube video, the group claimed it was renting out the deteriorating units as landlords. "For an addict, this is just a five-star hotel," one interviewee said. The other two RealT homes I visited were riddled with bullet holes. Several tenants told me they were withholding rent in hopes of forcing the landlord to make repairs.

In a Tim Hortons coffee shop in Redford in Detroit's west side, I met Maya, a tenant of RealT, who lives in a nearby square red-brick house. Every time Maya returns home, she parks in the driveway and sometimes sits in her car for up to an hour before daring to go inside. One of the bedrooms has water leaking from the ceiling, leaving a large hole exposing the wooden roof structure. Paint is peeling off, and damp, yellowing insulation hangs into the bedroom. Maya only dares to stay in the bathroom, kitchen, and living room, where she sleeps in the living room. "To be honest, I probably shouldn't be living here, but I'm trying to find somewhere else to stay," Maya said. "This place is just a slum."

A few blocks from where Maya lives, I knocked on Monica's door. She has lived in a house south of the famous Eight Mile Road for six years and recently has been living with two grandchildren. The tokens for this house are held by 331 people, who gain an average annual investment return of 9.3% from the rent Monica pays. Monica told me that the heating was broken and the water supply was unstable — I could see some broken windows and the roof was damaged. A long-dead tree stood in the front yard. At night, Monica couldn't sleep, worried that someone would break in through the broken windows. She said she had applied multiple times to enter an emergency shelter but was always told it was full. "Go home, dear. Just go home," Monica told me. "It’s too scary here."

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

Lawsuits, Finger-Pointing, and the Collapse of Trust: The Tokenization Experiment Completely Spirals Out of Control

In the Coleman A. Young Municipal Center on the fifth floor, amid the maze of beige tiles and worn carpets, I found Conrad Mallett, who oversees all civil litigation in the city. Portraits of Muhammad Ali and key figures from the Black civil rights movement hung on the walls of his office. Mallett, a former Deputy Mayor of Detroit and Chief Justice of the Michigan Supreme Court, noted last spring the coverage by Outlier Media regarding RealT. He launched an investigation. Building inspectors assessed the properties, documenting violations. "It turned out that there were thousands of non-compliant houses," Mallett told me. "We concluded that in the vast majority of cases, people are living in unfit houses."

Mallett’s deputy, Tamara York Cook, sent building inspectors door to door, putting her business cards on the front doors. Soon, her phone started ringing off the hook. "Most people were very eager to share their experiences," she said.

In July, the city government filed a civil lawsuit against RealT, its founders, and 165 related LLCs, accusing them of hundreds of public nuisance and regulatory violations, as well as owing hundreds of thousands of dollars in housing decay fines and property taxes. The lawsuit stated that 408 properties did not have a municipal certificate of compliance deeming them fit for habitation. The Jacobson brothers told Wired magazine: "In terms of the compliance certificates, RealT’s tokenized asset portfolio is not superior or inferior to other properties in the relevant postal code area."

Soon after, a judge issued a temporary restraining order preventing RealT from collecting rent or evicting tenants until these Detroit properties reached compliance standards. The order was later extended but allowed RealT to evict tenants who withheld rent after the relaxations.

On Telegram, some investors heard about the lawsuit, and Rémy Jacobson immediately stepped in to reassure them. Other than information from the Jacobson brothers, RealT investors had little understanding of the actual situation in Detroit. "We're committed to resolving all issues," Rémy said. 21 investors responded with heart emojis. Jean‑Marc also chimed in, promoting the rapid growth of the Detroit real estate market.

Around the same time, the Jacobson brothers informed investors that a potential buyer was interested in the building where Cornell Dorris lived — the same one with water accumulation in the basement. If investors agreed to sell, they would receive up to a 75.61% total return. 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. In a call with RealT investors at the end of July, Jean‑Marc announced that the property transaction "had been completed."

The buyer, East Coast Servicing LLC, shared the same registered address with RealT as listed in documents. The documents were signed by Rémy Jacobson on behalf of the buyer. It appeared that the Jacobson brothers had effectively 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 stating that the buyer had backed out, despite their prior claims that the property "had been completed." The brothers later told Wired magazine that East Coast Servicing LLC was merely a tool they used to assist in selling properties to foreign buyers.

The core argument raised by the Detroit city government in its lawsuit against RealT is that the company's business model inherently includes neglecting property maintenance. "The way they are able to generate annual returns is by not maintaining the houses to a high quality standard," Mallett alleged.

Jean‑Marc Jacobson denied this allegation. He stated that their intention has always been to help beautify Detroit's communities by allowing more people to invest. He explained that when RealT tokenizes a property, a fund is established for maintenance. The Jacobson brothers pointed out that for investors to earn substantial returns, properties must continuously have tenants and generate considerable rental income, and willfully neglecting that would make it impossible.

He claimed that property management companies and other real estate professionals had neglected the management of properties or otherwise deceived RealT. The company has already sued several of the 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 an electronic fireplace flickering behind him. He was bald, with a long black beard, and wearing cowboy boots, making for a striking appearance. As we talked, he stroked his beard with his fingers.

By then, Reed’s relationship with the Jacobson brothers had deteriorated. According to court documents, by 2024, they began bickering over the details of certain property transactions. Then they clashed over property renovation issues. Eventually, they ceased cooperation. The Jacobson brothers then sued Reed, accusing him of fraudulent misrepresentation.

In the lawsuit filed in February 2025 in Michigan court, RealT accused Reed of billing for repairs and renovations that were never performed. Reed denied these allegations. He also claimed that his role was just to help renovate a few RealT properties, rather than managing the entire asset portfolio on a day-to-day basis. In June of that same year, he filed a countersuit, accusing RealT of trying to make him a scapegoat and falsely claiming that 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 only encounter the wrong people at first... No one can say they won't meet scammers."

As the dispute with Reed made its way through the courts, the Jacobson brothers formed New Detroit Property Management. They handed over the management of the RealT 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 take me to see the recently renovated RealT properties his team had worked on.

As we drove, Palazzolo explained that his task was to identify vacant properties that could be rented out quickly with minor renovations to start generating income. Meanwhile, the city government continued to issue fines for dilapidated homes, which, Palazzolo said, meant pulling the construction team away from renovation work. "You have to understand how many properties we have," Palazzolo said. "The city government is issuing us fines like crazy; the workload is too much, really too much."

Even after New Detroit completed renovations, problems remained. In at least one case, someone impersonated a landlord, collecting a one-time fee and arranging for someone to move into a renovated RealT property. The Jacobson brothers stated that this impersonator tried to exploit the court's temporary stay on eviction orders, suggesting to the prospective tenant that they wouldn't be evicted if they paid a small amount to the city government's escrow account.

Palazzolo and I parked in front of the first property: a small red-brick house with a gabled roof and white trim. Palazzolo tucked a black folder under his arm, took me through the house, pointing out repairs he had arranged. The windows were intact, the bathrooms and kitchens were newly renovated, the walls were painted, the collapsed awning had been restored, and the floors were either polished or newly carpeted.

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

The bathrooms and kitchens have been remodeled, the collapsed awning has been restored, and the floors have been polished

He showed me five more houses in similar condition. They weren't lavish, but appeared clean and livable.

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

Jean‑Marc Jacobson acknowledged that the condition of Detroit properties was "poor," but he also criticized those who exposed RealT's problems. Throughout the summer, he communicated with French investors almost weekly on Telegram, repeatedly disparaging local journalist Mondry. "Clearly, this reporter doesn’t like us. We knew that months ago. He’s clearly only writing what he chooses to write, ignoring all contrary evidence," Jean‑Marc told investors on Telegram in early July. A few weeks later, he added, "He has never had this many clicks in his career. He is painting us as evil crypto capitalists, raising rents, and making vulnerable groups suffer." The Jacobson brothers expressed similar criticisms to Wired magazine, claiming that the publication did a "surface analysis" of this report and pursued a "targeted narrative." In September of last year, Jean‑Marc told investors that he saw the city government's lawsuit as a product of "administrative corruption, political agendas, backroom deals, and the abuse of power."

On Telegram, token investors occasionally questioned the credibility of the city government's case or Outlier Media's reporting. Recently, someone suggested that RealT should have conducted background checks on its property management companies. Jean‑Marc responded, "You seem to enjoy venting hatred." In another Telegram message, Jean‑Marc appeared to mock a tenant. "Emergency alert!!! My faucet is broken!!! Emergency alert!!! 🆘" he wrote. Three RealT token holders I interviewed described the Telegram community as hostile. The Jacobson brothers denied any hostility in the Telegram group; they stated that it was normal for tension to arise among the investor community during difficult times.

Despite this, investors began to pose increasingly pointed questions to the Jacobson brothers. In September, investors discovered 2023 documents they believed showed RealT had secured a $950,000 mortgage on two Chicago properties months after tokenizing them. One investor called this "very suspicious," as it left token holders facing the risk that if the loan defaulted, the lender might foreclose on the property. Jean‑Marc claimed that obtaining the mortgage was to assist the sellers, who would benefit in some unspecified way. He stated that these mortgages had since been paid off. "Sometimes company-level maneuvers are necessary," he told investors. "If we want to make a deal, sometimes we need to show a bit of flexibility." Columbia Business School real estate professor Tomasz Piskorski remarked that such arrangements described by Jean‑Marc are not standard practice. "I don’t see a reasonable justification for that. Maybe there is, but it’s unclear to me."

By late November, investors began to question a RealT property in Chicago that the city government had deemed dangerous and planned to demolish months prior yet was still generating rental income for token holders, indicating someone lived there. "I really don’t know what to think anymore," one RealT investor said on Telegram. I encountered a similar situation in Detroit. The 13 properties I visited last September that appeared vacant were listed on the website as "fully rented." The apartment building suspected to be occupied by a gang was the same. The Jacobson brothers claimed that the escrow system set up by the Detroit city government disrupted their ability to verify occupancy status.

Some RealT investors expressed feelings of betrayal by the Jacobson brothers. One told me he had stopped purchasing RealT tokens until the Detroit disputes were resolved. An investor based in Asia, TokNist, expressed skepticism about the Jacobson brothers’ management. Another investor, using the screen 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 are associated with unsanitary, dangerous properties, exacerbating the social plight of these vulnerable communities… We can’t ignore new scandals breaking out every week."

That Shawn Reed, who claimed he was never a property manager, also openly criticized last year when he posted a video on X touring a dilapidated building he claimed belonged to RealT. In one room, a filthy mattress lay on the floor; in the adjacent room, food containers and other garbage piled up. "If I held tokens for this building, I’d be furious," Reed said off-camera. However, by then, Reed had already joined another tokenized real estate company.

In February, the Jacobson brothers informed investors that they planned to sell a large number of properties from the RealT portfolio with the aim of "optimizing overall investor returns." However, to free up funds to restore the homes to a 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 outraged; they questioned on Telegram why the Jacobson brothers could unilaterally decide to cease rental payments on properties they owned. The Jacobson brothers stated that this operation was permitted under the RealT terms, as the directors, they had the authority to decide whether to distribute rental income, but some investors equated it to "theft."

The trial in Detroit is scheduled to start in May. Other legal disputes involving RealT are ongoing. While attempting to push its properties to the market, the company seems to be implementing a new strategy in new countries. RealT is now selling tokens for "under construction" properties in Colombia and Panama, where investors are effectively crowdfunding construction projects in hopes of reaping high returns in the future. "The under-construction projects greatly leverage the concept of tokenization," Jean‑Marc told me in an interview. "It has very bright potential." But investors seem less convinced; these tokens went public months ago, yet thousands remain unsold.