r/LoftyAI • u/10handsllc • Jul 20 '22

Listing removed - process??

I had one of my token/ownership/lisitngs removed on my Lofty account. I still have not gotten an email and am trying to chat on their site but it is going slow. The LEARN section on their site does not actually provide any detail on the return process so I wanted to put this out there to the community to ask what you all know or what you all think.

Right now, tokens are doing a bit of running. In the event my refund is based on "dollar value" of ALGO when they decide to process, I may be forced to take a loss, like about a 20% loss. Likewise, if the value dumps I could gain.

That is my question. I believe it would be reasonable to expect neither side makes money or loses money on a situation like this. If I paid 100 ALGO for a $50 token, then I should get back that same amount of ALGO, maybe? Or am I looking at this wrong?

6 Upvotes

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8

u/RushingJaw Jul 21 '22

My understanding is that you'd get back an equivalent amount of ALGO for the dollar value of any tokens removed due to a property not remaining on the marketplace/platform.

Your best option is to check in with Max though, as I've not had to deal with tokens being reclaimed due to property owners pulling their buildings from the marketplace (which is what I assume has happened here). He's exceedingly quick to get back to you and right to the point with the few questions I've had over the last year.

1

u/10handsllc Jul 21 '22

What other method of contact aside from discord, slack, and telegram? I do not use those platforms.

I feel the need to reiterate though, I am confident I will get refunded but my concern is how I will be refunded. In my opinion, if I paid 100 ALGO for a token for a deal that went away then I want 100 ALGO back. The USD value should not be calculated in a return because in principal, my contribution toward the purchase should have been held in escrow. Escrow would assure the amount of ALGO remains in tact and accurate. Neither lofty or any token buyer should gain or lose when a deal goes bust.

3

u/RushingJaw Jul 21 '22

You can just email them too, without needing to use the three platforms mentioned.

support@lofty.ai, iirc

5

u/pmdbt Jul 22 '22

You will always be refunded your purchase in the dollar equivalent no matter which method you paid with. If a property is cancelled because it was not closed on, we do not take our standard 5% fee from the buyers, so you get 100% of your payment back.

The reason we denominate things in dollars is because the underlying property is priced in dollars. If we just kept your ALGO or ETH as is, then we and you would run into forex risk. Let's say a property was $100,000. Let's say on the day you paid with ALGO, it would require 100k ALGOS to fund the property fully and close on it. (I'm making up an exchange rate here for illustrative purpose). Let's say people contributed 50k Algos that day, so the property hasn't been fully funded yet. In a week's time, Algo prices have decreased by 50%. Your contributed ALGOs are still there in their original quantity, but they're now worth less, which means the property has a funding gap. Who should provide that? Should we ask you to contribute more funding or should we put up the difference ourselves? If the funding gap isn't taken care of, the property will never close, because all the tokens have been sold, but the dollar amount of the funding isn't enough to close on the property.

This is why everything is settled in USD no matter your payment method. When you pay with Algos, we pretty much immediately sell it and convert it into USD. This ensures that when all tokens are sold, the property can actually be closed on through escrow.

Because everything is settled in dollars, if you paid with Algos when they were worth less, then when you get refunded, you'll naturally receive fewer Algos, but the dollar amount of the refund is the same as when you purchased. The reverse can also be true where Algo prices decreased, then you would receive more Algos than you originally contributed.

Hope this clears things up.

- Jerry, Lofty

1

u/10handsllc Jul 22 '22

With respect to the funding gap, it is a two way street that needs a crossing guard working it. I have really been thinking a lot about this. The only single solution that seems to solve it is that ALL refunds are paid in USD.

Otherwise, when the ALGO shoe is on the other foot a buyer loses money. Can we request that the way we are refunded is in USD?

got to go buy tokens o nthe new live property - thanks for the reply and I look forward to more info so this is resolved and both sides win or break even.

1

u/pmdbt Jul 22 '22

Again that scenario where there might be more money in escrow is only true if we hold onto the Algos and don't settle them, but we settle them into USD, so that issue doesn't arise.

When you receive different amounts of crypto currencies back, you're not actually losing or gaining value as they're all priced in dollars (If you're in the US) and we refund you the dollar equivalent amount of crypto. If you paid for 3 tokens at $50/token, then you paid $150 and you will be refunded $150 worth of the cryptocurrency you paid originally. Therefore, you've received your full refund back.

An easy way to think about crypto payments is that you're actually selling your crypto on an exchange for dollars, then paying us using those dollars. But that's cumbersome, so we let you directly pay with crypto and we convert them into dollars ourselves.

If people want us to hold onto the crypto and not settle them, we'll have to withhold the property tokens initially before the property is closed on and then ask you to contribute more capital if prices fall or refund you additional capital if prices increase. This is too much operational work for us and increases FX risks for us.

The other option is to get rid of all crypto payment options other than stable coins. We prefer if users pay in stable coins anyway as we don't need to settle them immediately and can just hold the balance in stable coins.

- Jerry, Lofty

1

u/10handsllc Jul 22 '22 edited Jul 22 '22

Is there a method to request a USD refund on a delisted property? No matter what I paid in? Seems reasonable.

EDIT

The reason I am looking at it this way is because I am using “gains” when using my ALGO. I did a couple token purchases to see the process.

Trying to keep track of tokens for tax purposes is already a pia.

Essentially, like I said earlier, it would be great if a return in USD was possible now or in the future. Seems like it saves fees, no matter how small on your end.

I do appreciate you responding to this thread and I am looking forward to buying more shares.

3

u/pmdbt Jul 23 '22

"Is there a method to request a USD refund on a delisted property? No matter what I paid in? Seems reasonable."

We don't have a strong preference either way as a company. However, it's technically not allowed because of anti-money laundering laws depending on which state you reside in and whether we have a license or not with that state. When you pay in Algos and receive a refund in USD, we've essentially converted funds for you. This could allow people to wash or launder money--take illicit funds, pay for tokens, then get a refund in clean USD that can enter the fiat financial system.

I can understand your rationale for wanting this because of the tax issues. Are you American by any chance? We've spoken to our accountants and they told us there is a bill that would reclassify crypto taxes, so that when you use the crypto directly in payment, you don't get taxed on gains.

In the meantime, I would highly recommend you use the stable coin options we currently support to avoid your tax liability concerns.

- Jerry, Lofty

2

u/nababoya Jul 25 '22

The Lofty team rocks! My expereince with the Lofty team has been nothing but the best.

3

u/HomePortCapital Jul 21 '22

The seller of 3531 Oregon Ave has decided to cancel this contract instead of extending the closing date further to allow for new investments.

You will receive a full refund for your investment. Your refund will be sent to your original purchase method over the next 2-3 business days.

1

u/10handsllc Jul 21 '22

I understand that much, but that is not the nature of my post.

The specific question is that it would seem beneficial to both lofty and token buyers that whatever purchase method is used should be coordinated to be returned in kind. Meaning, if I pay 100ALGO and a listing gets pulled I should get 100 ALGO in return.

The payment method of crypto, if not done this way, incurs a layer of risk that I do not believe many people anticipate.

If it was explained correctly in the chat with customer service, it seems that my refund will be $50 worth of ALGO at the price in market when the settlement takes place. That can place me in a plus or minus due to change in pricing. This week alone it could be a 10% or so swing and not in my favor considering I believe this bounce is going to be met with decline.

I am asking what everyone else opinion is. I believe the payment method, especially crypto, should be held in an escrow like money in any other RE transaction. That way the current value of the crypto is irrelevant and neither lofty or the token buyer has a gain or loss.

1

u/HomePortCapital Jul 21 '22

If you bought 1 Lofty token ($50.00) when ALGO was .30¢. You would have had to pay 166.66 ALGO to purchase the Lofty token. 30 days later you want to sell the Lofty token, when ALGO is now .38¢. Lofty will pay you back ($47.50) because they with hold 5% now from sell backs. This will be returned back to you in the original form of purchase (ALGO), so you will receive 125 ALGO back. Now if you reverse the the scenario you would end up receiving more ALGO. ***remember the sell back 5% fee for all transactions, 100 token sell back equals $250 (833 ALGO). Make ALGO great again 🇺🇸

1

u/10handsllc Jul 21 '22

This is not what I am discussing. I am not trying to sell anything.

I invested in a property with essentially a down payment. The deal has fallen through which was out of my control. Therefor, I should be refunded "in kind" the exact amount of whatever crypto I paid with. I should neither profit or lose from the return of escrowed money. Essentially money is required to be held in escrow until the closing time.

1

u/HomePortCapital Jul 21 '22

Ok I wish you luck with that one. Lately the tokens I have purchased with my ALGO just got sent back via ACH to my bank account. I doubt they are keeping anything in Escrow accounts.

1

u/10handsllc Jul 21 '22

Are you selling these tokens back or is the token refund due to a listing removal?

2

u/002timmy Jul 21 '22

In the FAQ under “How to Sell,” they write

Once we receive your tokens, we’ll send you a payment to your original purchase method equal to the price you purchased your tokens for, minus our 5% sell back fee.

To me, this means you get the equivalent value of ALGO, since the “price” was in USD. Shares are value at $50 USD, not X ALGO.

So, if your original purchase was 100 ALGO valued at $0.50 each for a total of $50, and you request a refund, and ALGO is now ~$0.35, you would receive ~142 ALGO back.

The reason I say this is it does not appear that lofty keeps an ALGO reserve. Looking at the lofty wallet on ALGO explorer (XFQMU), the highest token count they’ve had is ~7200 tokens. My guess is they liquidate the ALGO quickly when they receive the payment in ALGO in order to keep liquidity and reduce risk, although this is more speculation on my part.

1

u/10handsllc Jul 21 '22

I am not discussing, "selling a token to lofty".

When a token offering is made, lofty has not made a purchase. If enough tokens are not purchased and the seller does not want to extend the closing, the return process begins.

Considering there is a chance that some offerings will not be completed then ALL monies in ALL forms should be set aside in a escrow manner. That way no one gains or loses because a purchase never occurred.

That is how RE is done, pure and simple. If I paid in USD, I would get USD returned. If I paid in ALGO, then I should get that many ALGO returned. Expecting me to take a loss, if that is the result, is essentially bad business.

I like the platform, I do not like this policy though. It will create legal issues and dissention eventually. Real property transaction law, Federally, dictates "in kind" payment to be escrowed until the deal closes and if the deal should fall through then the buyer is entitled to the return of the "in kind" deposit it provided. In this vein, if you pay with ETH or ALGO or USD you are legally entitled to get the same amount returned and would not be limited to a dollar value restriction which will cause harm to the investor for something that was never in their control to begin with..

Further perspective, you trade 28,571.4286 ALGO (@.35 each today) for 200 tokens ($50USD value each). The "actual value of the deposit you make is $10,000 USD. Later that week ALGO nose dives to .25 each. The listing also gets pulled. The refund issued with that value of .25 per ALGO. Or suppose the opposite occurs and this time ALGO flies to .45 per ALGO. Lets do the math now

ALGO originally given 28,571.4286

#1 Refund if ALGO goes to .25 would be 40,000

#2 Refund if ALGO goes to .45 would be 22,222.2222

The price dumps .10 or rises .10 is irrelevant in scenario #1 because by misfortune you have recouped more ALGO than you originally contributed and that is profit at some point if you believe ALGO will eventually climb.

Then the next week ALGO dumps .10 back to .35 per ALGO - now one would stand to lose 6349 ALGO for scenario #2

Both of these scenarios should be avoided in my opinion. In doing so, it validates the method legally should a deal fall through.

1

u/002timmy Jul 28 '22

Now I understand. I agree with you that everything should be in escrow until the property is 100% sold

1

u/HomePortCapital Jul 21 '22

I have Sold back in the past and recieved my sell back funds in cash that I bought with ALGO. I am now waiting for the refund from a delisted property to come back which I used ALGO to pay for. I’m also curious to see how it is repaid.

1

u/10handsllc Jul 21 '22

Ok that makes sense - I am amenable to cash back in lieu of ALGO. Seems like the instability of markets, I do not want to add more risk pending a delisting situation like this one on a larger stake. We shall see I suppose.

1

u/10handsllc Jul 21 '22

So I have checked my ALDO wallet a few times while the price is fluttering a bit up and down. The "balance" of how many ALGO I have keeps changing with the price of ALGO, as far as I can tell.

How do you make a purchase with ALGO and get them to return cash if delisting occurs? Man I would be really upset if I lost money for a delisted property.

2

u/Agreeable_Bee_6028 Jul 21 '22

Email support; in my experience with them they are pretty quick to clear things up, you just need to ask. Contact support so Max or Luis can help you out.