“What’s more common than outright scams is people claiming to have shares they don’t actually possess—collecting payment first and only then searching for the shares, often unsuccessfully.”
In this podcast episode, Dio Casares, founder of Patagon, lifts the veil on the secondary market trading surrounding high-profile companies like Anthropic. He reveals that secondary transactions related solely to Anthropic involve hundreds of billions of dollars, with per-transaction fees reaching as high as 10%. Approximately 10%–20% of executed trades involve fraud or share forgery—and fund professionals are already earning more from such transactions than from their core investment activities.
Even more concerning are nested SPV structures, “forward contract”-style employee equity, and “tokenized” private equity. Should Anthropic go public, distribution delays for multi-layered SPVs within the DTCC system, uncertainty over whether GPs at each layer choose to hold their positions, and the potential for certain shares to be voided at the company level could collectively trigger a wave of litigation lasting several years.
Regarding market structure, Dio Casares notes this is a relationship-driven market: some participants sell shares they hold; others sell access to buyers. Private market fundraising volumes have exceeded IPO proceeds in recent years, and the combined size of documented secondary market transactions plus funding rounds now exceeds $200 billion.
On transaction compliance, he explains that while Anthropic broadly supports direct trading, the company strongly disapproves of platforms like Hive and Forge, criticizing them for spamming email campaigns that disrupt its current fundraising round. In response, both OpenAI and Anthropic have recently launched employee tenders, enabling employees to sell shares directly at the current valuation—effectively “stealing” liquidity from gray-market secondary sellers.
Addressing fraud risk, Dio Casares emphasizes that although rumors abound, 10%–20% of executed trades genuinely involve fraud—including forged share certificates. He advises retail investors that if they feel uneasy about the underlying vehicle holding their position, they should exit promptly.
[TechFlow]
Tokenized Private Markets: The Crypto Industry’s Next Frontier or Minefield?
The recent Bankless interview with Dio Casares, founder of Patagon, has lifted the curtain on a $200+ billion private market ecosystem that most crypto investors have overlooked—until now. With secondary market transactions involving companies like Anthropic reaching hundreds of billions of dollars and fraud rates hovering at a staggering 10-20%, this revelation isn’t just a traditional finance concern; it’s a direct precursor to the tokenization of private markets that will inevitably impact crypto.
The Unseen Private Market Behemoth
Casares’ insights expose a market operating in shadows yet larger than traditional IPO markets. The relationship-driven nature of these transactions—with some participants selling actual shares while others merely sell access to buyers—reveals an opaque ecosystem ripe for disruption. The 10% transaction fees and pervasive fraud create clear market inefficiencies that blockchain technology is uniquely positioned to address.
For crypto investors, this represents both opportunity and peril. On one hand, the sheer scale of these markets suggests massive TAM (Total Addressable Market) for tokenization solutions. On the other hand, the high fraud rates indicate that crypto-based solutions must overcome significant trust barriers.
Tokenization: The Great Connector
The explicit mention of “tokenized private equity” is the critical link between traditional private markets and crypto. This isn’t a theoretical possibility—it’s already happening. The nested SPV structures, complex ownership chains, and distribution challenges described by Casares represent precisely the problems tokenization aims to solve through immutable ledgers, automated compliance, and transparent ownership tracking.
However, the crypto community must confront uncomfortable parallels. If traditional private markets suffer 10-20% fraud rates, what prevents tokenized private markets from replicating these issues? The answer lies in design principles: tokenization solutions must embed transparency at the protocol level rather than relying on intermediaries whose incentives may misalign with investors.
Sector-Specific Implications
Security Token Platforms
The most immediate beneficiaries will be security token platforms that can demonstrate superior compliance and fraud prevention. Traditional platforms like tZERO, but more likely next-generation solutions incorporating zero-knowledge proofs for privacy without sacrificing auditability, will capture significant value.
The key differentiator won’t be tokenization itself—any platform can tokenize assets—but rather the ability to navigate the complex regulatory landscape while maintaining the efficiencies that make tokenization valuable. We’ll see a consolidation in this space as the market matures and regulatory clarity increases.
DeFi Protocols
DeFi protocols that can bridge the gap between traditional compliance and decentralized finance will emerge as critical infrastructure. Specifically, protocols that offer:
- Automated compliance modules that can enforce securities regulations without sacrificing decentralization
- Oracles that can verify off-chain corporate actions on-chain
- Multi-layered governance structures that balance regulatory requirements with community control
Protocols like Goldfinch or Maple that are already experimenting with credit tokenization may have first-mover advantages, but we’ll need entirely new solutions specifically designed for equity tokenization.
Corporate Tokenization Solutions
The revelation that Anthropic and OpenAI are launching employee tenders to “steal liquidity” from gray-market secondary sellers demonstrates the growing interest in corporate equity tokenization. Companies looking to liquidate employee equity without traditional IPO processes will increasingly turn to tokenization solutions.
Projects like Swarm or Dapper Labs that focus on corporate tokenization could see significant adoption, particularly if they can solve the key challenge of regulatory compliance while maintaining the benefits of tokenization.
Risk Factors That Can’t Be Ignored
The most concerning revelation is the fraud rate. In a crypto environment already plagued by scams, the prospect of introducing tokenized private markets with similar fraud rates is alarming. Investors must be extremely cautious about:
- Platforms that promise liquidity without proper asset verification
- Tokenized assets backed by SPV structures without transparent on-chain representation
- Secondary market platforms that replicate the relationship-driven opacity of traditional private markets
The potential litigation risks described by Casares—if Anthropic goes public and faces challenges with nested SPV structures—could create contagion effects across tokenized assets, particularly those with complex underlying structures.
Investment Thesis
The tokenization of private markets represents a multi-trillion dollar opportunity for crypto, but it won’t follow the typical crypto adoption curve. Instead, it will progress through distinct phases:
- Phase 1 (0-18 months): Niche adoption by highly compliant platforms serving accredited investors
- Phase 2 (18-36 months): Emergence of hybrid models combining traditional compliance with crypto efficiencies
- Phase 3 (36+ months): Mainstream adoption as regulatory frameworks mature and investor confidence builds
The winners in this space won’t be the projects that tokenize fastest, but those that prioritize compliance, transparency, and investor protection above all else. The 10-20% fraud rate in traditional markets represents both a cautionary tale and a market opportunity for crypto solutions that can demonstrably improve these metrics.
For investors, the key is to identify projects that aren’t just tokenizing for tokenization’s sake, but solving genuine problems in the private market ecosystem while navigating the complex intersection of securities regulation and decentralized technology. The coming years will separate the tokenization pioneers from the pretenders, with massive rewards awaiting those who get it right—and significant risks for those who don’t.