2 July 2025. The City of Detroit files a lawsuit45 against RealT and its satellite entities. Conrad Mallett, the city’s corporation counsel, holds a press conference.
The file the city let me consult runs to several thousand pages. The investigation took months. Methodically, the city lays out its case against RealT: more than 400 buildings without certificates of compliance, which makes renting them illegal. 53 properties deemed unquestionably dangerous to public health. Hundreds of unpaid blight violations, worth around $500,000. And most serious of all: RealT keeps collecting rent despite the legal ban.
Conrad Mallett does not mince his words46:
RealT, he says, is a provider of slum housing desperately trying to escape justice by hiding behind 165 different entities. The game, he adds, is now over.
Councilmember Angela Whitfield Calloway hammers the point home: behind the high-tech language, she says, lies a problem all too familiar in this city, and this is not innovation but exploitation.
The lawsuit is not just a legal procedure. It lands at a key moment in Detroit politics. The outgoing mayor, Mike Duggan, in office since 2014, is not running again: he now has his sights on the governorship of Michigan. In November 2025, Detroit will therefore elect a new mayor.
Two candidates remain in the race. On one side, Mary Sheffield, president of the city council, backed by Duggan and seen as the candidate of institutional continuity. On the other, Solomon Kinloch Jr., pastor of a Detroit megachurch, who promises 10,000 affordable homes and a more social agenda.
Both finalists are Democrats: Detroit has voted solidly blue for decades. But their profiles differ. Mary Sheffield embodies institutional continuity and a more pro-business style. Facing her, Pastor Solomon Kinloch Jr., backed by unions such as the UAW47, runs a social campaign focused on inequality and the promise of affordable housing.
In a city where nearly one home in five stands empty, where abandoned houses feed crime and poverty, housing has become the central campaign issue. Going after RealT, a foreign, crypto-funded company, sends a clear signal: Detroit protects its residents from slumlords.
The lawsuit is therefore aimed as much at voters as at the courts. RealT becomes a convenient symbol: a legal target, but also a campaign poster.
It is a sledgehammer blow for RealT. Since early 2025, faced with the first inspections and Reed’s departure, the Jacobsons had launched emergency renovations. They had set up New Detroit Property Manager, a management company costing $1M a year, and set aside $2M to $3M for works.
Jean-Marc Jacobson explains the logic behind this hefty outlay:
He has put an enormous amount of time and money into RealT, he says, and if he does nothing, he could lose everything. So he is taking responsibility: he is paying, protecting his tenants, protecting his token holders.
He insists on the work already under way, showing me several photos of renovated properties during our video call:
Some, he says, are already completely repaired: 20, 30, 40 of them, closer to 40. But not hundreds: he only started in 2025, and he cannot work miracles. He is showing his good faith, he adds, and moving forward.
Why spend so much? RealT’s valuation could be approaching $100M. The company has taken $16M in fees on property acquisitions, and generates between $250K and $500K a year in revenue from rents. For the Jacobsons, saving RealT for the long run is easily worth a $3M investment.
Initially, RealT thought it could get out of trouble by first renovating the properties quickest to put back on the rental market, among the 80 it considered critical. The lawsuit changes everything. It now has to focus on the fifty or so properties the city deems dangerous. With 408 properties lacking certificates, the task becomes complicated. And above all, very long. With timetables (both practical and political) that hardly fit together.
23 July 2025. Judge Annette Berry of the 3rd Circuit Court grants the City of Detroit a TRO48. RealT can no longer evict tenants or collect rent on the 408 properties listed until they are brought up to code49.
Tenants must be told within 14 days, before 5 August, that they can pay their rent into escrow. For the 53 dangerous properties classified as Priority 1, the order is draconian: securing and clean-up within 30 days, full repairs within 90 days. On 5 August, a hearing was due to decide whether the temporary order would become a preliminary injunction until the case is fully resolved, but the hearing has been adjourned 2 times.
The next day, 24 July, RealT emails its investors. The tone swings between defence and attack. The company announces it is suspending dividend payouts and the buyback programme for its Detroit properties. The money will go into escrow until the 5 August hearing.
A telling technical detail: RealT reassures investors that the YAM50, the smart contract that automatically pays out rent in stablecoins, remains fully operational. The crypto machinery keeps whirring, even though the flows are frozen.
But RealT hits back at what it describes as an overzealous city government with a political agenda.
The company proudly lists its recent renovations, more than a dozen properties, which incidentally allow it to push up yields. 10974 Worden, let for $1,300 instead of $895 (+45%). 18286 Oakfield, on the market at $1,200 against $812 before (+48%). Strathmoor, Liberal, Coram, Appoline, Tracey, Chatsworth... the list goes on. And this revealing line: readers will notice, the company writes, that some properties on its renovated list are on the city’s Priority 1 list, which in its view underlines the city’s agenda and its aversion to the truth.
As for me, since July my income shows up in the reports but stays frozen. 0.139566 USDC earned on my State Fair property. Earned, but not paid out. RealT promises that if the order is lifted, the rent owed will be paid retroactively.
The same day, Conrad Mallett holds his press conference51:
These properties, he says, are in such a state of disrepair that there is no way their owners could not know their tenants are living in substandard housing.
And he adds a threat:
As one of his clients put it that morning, he says, it is a good thing the city has the Detroit Land Bank52.
Translation: if RealT does not comply, the city will seize the properties.
For his part, Jean-Marc Jacobson says he is negotiating the payment of all arrears and has a renovation plan spanning several months.