Disclaimer: Nothing below is a recommendation or a solicitation to buy or sell any domain name or do business with any of the companies mentioned below.
Aron Meystedt announced today that his proof of concept for selling fractional ownership in domain names has sold out.
Shares in NNR.com were sold valuing the 3L.com at $30,000.
Here was the offering memo:
NNR.com – Purchase Shares HereWe all know that the high-end of the market is where the money is to be made.
But, for many of us, that tier of domain name is unattainable. Until now.
Hi, I’m Aron Meystedt, and I’ve sold millions of dollars in domain names in the past few years alone: XF.com, OC.com, NL.com, LK.com, QR.com, HY.com, SZ.com, XZ.com, Black.com, Quick.com, Cute.com, Digital.com, DEC.com, Classic.com, Luxe.com, MutualFunds.com and dozens of others. You might remember the auctions we held at Heritage (HA.com).
I am offering a prime three-letter .com for fractional ownership: NNR.com
This means that you are now able to own shares in NNR.com, as we are splitting ownership among everyone.
Below, you can select how many shares of NNR.com you wish to purchase. This is an amazing three-letter .com!
The stated wholesale value is: $30,000
The price per share is $100
There are only 300 total shares that will exist.
This is an opportunity to own a stake in a very valuable name, without spending a fortune.
You will hold a percentage ownership in this asset, depending on how many shares you pick up.
Limit of 30 shares per person.
Enter your name, email address and the number of shares you want to buy.
Additional terms are below, including the 100% refund I am offering.
Thank you!
Aron Meystedt
March.com (in progress)
My background is in securities and I have been hesitant to jump in without hearing more about regulations and licenses.
In general, all securities offered in the U.S. must be registered with the SEC or must qualify for an exemption from the registration requirements. The registration forms a company files with the SEC provide essential facts, including: … Information about the management of the company.
You can read the Securities and Exchange Commission’s fast answers here.
You can read more here
Aron has posted the following:
FAQ: Is this a security?
I have worked with a team of securities lawyers for over a year, and spent a fortune. Short answer, NO.
We’ve found a way to make these offerings NOT a security – which is huge. That means 24/7 trading, peer to peer, with no restrictions. Our platform will be in legal compliance with securities laws — meaning, we’ll structure the offers to our buyers that make the positions you buy not a security.
I would take it that Aron’s counsel believes there is an exemption for what he will be offering. You can read about exemptions here.
Someone asked a great question with regards to a UDRP.
wwwweb said: ↑ What if the name gets hit with a udrp, and taken away, what happens to investment, am I obligated to pay for legal fees based on ownership.
It’s a great idea, for domain holders to raise working capital from dormant domains.Aron: We will have that worked out. As of now, I am paying legal fees from UDRP and I refund buyers if a name is taken/stolen/expires etc.
A lot of people have discussed the prospects of fractional ownership, Reza from DAN.com, Rob Monster of Epik. It looks like Aron is committed to rolling out a full exchange to buy and sell. It will be interesting but in my opinion we need more info on the legal standing before jumping in.
There are people selling fractional ownership in everything these days from collector cars to baseball cards.
So do you like the idea of owning some share in a 3L.com? What about a 2L.com or NNN.com?
Besides those you listed, There were other attempts at this years ago.
Yes I remember one or two, you like the concept Adam?
Fusu.com was an attempt at this. I actually bought and sold shares in a domain back in 2008 (I believe) and I made money. However they were not able to get enough interest to make it viable. Also there where the questions about the legality of “securitizing” back then too.
I forgot the name thanks for posting. You made profit? Nice
I personally like Aron, as he has selected and auctioned two of my domains in the past. I also like the idea of fractional ownership in unique situations. One of the most important options for anyone making an investment is liquidity. One of the advantages of registered securities is that they can be liquidated if necessary, in addition to the built-in safeguards. I would think that this type of investment would fall under the sophisticated investor rules which would eliminate anyone without substantial net worth? If someone with Aron’s experience can pull this off this could open up a whole new world in domaining. IMHO
I thought that too Harry with regard’s to the sophisticated investor but I actually think this appeals to the opposite. Mike Berkens or Rick don’t need to buy fractional shares in anything, this seems geared to me for smaller investors. “Hey are you regging pigeon shit domains, instead of 30 regs of pigeonshit get yourself 3 shares of NNR.com”
You are right Mike and Rick are not good prospects, but there could still be problems with unsophisticated investors unless they use the new SEC Small business exemptions? It doesn’t look like they are even considering a security situation? Something new? If I were to do this I would form a new Florida Corp for $70; sell 35 small investors; put in the hot domain; complete an Equity Crowdfunding Offer for small business and raise up to $1.0 million in 12 months [small investors can put in $2,000 each]. If it’s a good enough opportunity file a 15 (c)2 11; find a market maker; and then take it public.
Interesting, would like to hear more. I do reckon it’s for those with lower budgets than those who have the money for large scale purchases.
Hi, all
Amazing idea and thinking next Level,
But I founded some problem with security,
“ my opinion we need more info on the legal standing before jumping in.” exactly Sir, Raymond Hackney,
I am also filled forms and drop last minutes from this idea,
Thanks for your time
I did not want to partake because I don’t like that domain!!
As hinted by Ray, I do like the idea of allowing folks to have shared interest in shared outcomes. That just makes sense from an asset diversification standpoint.
The folks who were early investors in Berkshire Hathaway did amazingly well, largely as a bet on the Fund Managers, Warren Buffet and Charlie Munger. Regardless of how, the shareholders did GREAT.
As for the implementation here, it looks like a proof of concept. The price point was attractive, and many people like and/or trust Aron.
If the concept takes hold, what I would be interested in exploring is a more versatile solution for tokenizing assets. Epik owns the domain name TrustShares.com for this concept. It is on the horizon.
For those who want a primer on the US regulatory climate for such things, here is one read:
https://hackernoon.com/tokenizing-assets-for-dummies-20cb7ccccbb
Good luck to all!
Look forward to seeing EPIK venture into this space, as they have a large domainer audience I think they could do really well with big ticket domains, in terms of getting masses into the purchase.
I like the idea, but this statement could turn out to be problematic:”FAQ: Is this a security?I have worked with a team of securities lawyers for over a year, and spent a fortune. Short answer, NO.”
Under the Howey test, a security is the functional equivalent of an investment contract, which is “a contract, transaction or scheme whereby a person [1] invests his money [2] in a common enterprise and [3] is led to expect profits solely from the efforts of the promoter or a third party.” SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946). Lehman Brothers Comm. Corp. v. Minmetals International., 179 F. Supp. 2d 159, (S.D.N.Y. 2001).
While it is clear that the first 2 elements and the first part of the third element of the Howey test are met here (investing money, common enterprise, and expectation of profit), the ‘efforts of a third party’ element is at issue. Given that fractional owners expect one person to control the domain, negotiate its sale, coordinate the payment of renewal fees–and given that the fractional owner (presumably) has no control over the use of the domain– a court may be inclined to find the fractional owners are relying on the efforts from the promoter/third party.
If we assume that the fractional ownership sale is a security, and that the promoter does not want to register the sale (and who would?), the promoter will need an exemption from registration (e.g. Reg. D, Reg A+, Reg Crowdfunding, etc.). These exemptions generally require varying levels of disclosures, verification of investor sophistication, and relationship restrictions (e.g. Reg CF requires offering through a FINRA portal), and are subject to varying restrictions on resale/marketability.
More importantly, if a promoter makes the statement that fractional interests is not a security (and therefore not subject to these resale restrictions) when it is objectively a security, that could be viewed as a material misstatement or omission by an investor who invests in the fractional interests and is later prevented from reselling it when the price of the domain goes up.
Who is responsible for determining asset value? Or the value will depend upon the mysterious circumstances – the dollar value assigned *invested * to a domain name in each case.
Why choose one domain when you can choose from 130 names currently onchain like servicechain.com and others over at crypto.contrib.com/domain . Plus you get network effects and a current working system. Past two years we have been testing fractional stuff with our eshares.com mechanism and Contrib model and have OG’s like Dr. Hamm, Monte, Andrew R and others invested.
Don’t tokenize a domain, we have that patent and plan to enforce it and a potential better way that covers utility and equity token issues. If you have premium names and want to jump on the best network and tech platform three years ahead, Ping us at chad@contrib.com for a demo
Patent to tokenize a domain, absolute rubbish, fractional ownership cannot be patented, maybe your specific process, by no means anything else.
our patent is not on fractional ownership of a URL.. “Virtual Entity using equity systems” so anything your trading the value of a URL on (token) other then FIAT is our patent.
No problem just have these high paid securities lawyers issue a letter of opinion stating why these shares are not securities and are eligible for an exemption..No big deal and this letter costs 3k? 5k? 10K? The more important legal aspect would be when this fractional domain deal goes south these issuing lawyers better have their E&O issuance paid in full…after all what could go wrong? no liquidity, longer holding period not explained in the prospectus, wife’s complaining about an investment that bears no monetary return, Wife unhappy about the sold price after all a wife is a legal financial partner when they are married.
I’m sure these attorneys disclosed this and you have it all figured out..nothing like being a pioneer guinea pig in the public market..
Perhaps make this one step further, create an STO (secure token offering) for a portfolio of domain names?
STO are regulated and can only be offered through SEC licensed brokers. Maybe one day people can buy and trade domain name ownership/portfolio like stocks?
you can now at crypto.contrib.com/domain , 130 names on chain. Our client owns utilitytoken.com and EquityToken.com and was issues a patent for something that might just be the solution..
It’s great that he has made such a positive step to take this idea forward and it’s also good to see the domain investment community support this. I think Reza @ DAN and their technology will provide a more secure platform (I am not saying Aron’s method isn’t by the way) based on Blockchain to really gain wider acceptance. Waiting to see what Reza and his team come up with…
Not for me personally … i prefer to own whole domain name and have full control of it anytime I want.
Fractional ownership allows for domains to sell, and to sell for more.
You are missing the point.
LIQUIDITY!!!!!!!!!!!!!!!!!!!!!!