Can Investors Pay by Check, Credit Card or Crypto in a Syndication?
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Securities law does not say how an investor must pay, so a check, card or crypto can be legal in some deals. In practice, nearly every syndication uses a bank wire into escrow, because a wire is fast, traceable, final and matched to the investor's name. Cards allow chargebacks, crypto swings in price and hides identity, and a check can bounce days after you counted it. DoorRaise investors fund by wire only.
What does the law say about how investors pay?
Rule 506 sets who can invest and how you may solicit them. It does not say how to collect money (17 CFR 230.506). The method comes from your documents, your escrow agreement and your bank. The same rules about fraud and misleading statements apply to whatever you choose.
Why is a wire the standard?
A bank wire is final and quick, carries the sender's name and account, and is easy to trace. Large amounts in a single day are normal for a wire and unusual for other methods. The escrow bank can match each incoming wire to a signed subscription and release funds on the conditions in the escrow agreement. See how investors commit and wire and escrow in a syndication.
What is wrong with a check?
A check is slow and can bounce or be returned days after deposit. If the sponsor has already treated the money as funded, the closing plan can break. A check also puts paper money in a mailbox or an office, and the sponsor's name on it can blur the line between the deal and the sponsor. If you accept a check, deposit it only into the escrow account and wait for it to clear before you count it.
What about a credit card?
A card can be disputed, so a payment can be reversed after the fact. Processors also charge fees and often limit large transactions and the sale of securities. A reversed card payment after closing leaves a hole in the capital stack. Cards are poorly suited to the amounts in a syndication.
What about crypto?
Crypto adds price swings between the day an investor pays and the day the property closes, tax questions about the investor's gain and the deal's basis, and anti money laundering concerns about where the coins came from. Many banks and escrow agents will not accept it. If an investor wants to use crypto, ask them to convert to dollars and send a wire from their own bank account. See know your customer checks.
Where should the money go?
To the deal's escrow account at a bank, in the deal's name, never to the sponsor's personal account or to a business account that is not the deal's. Check the instructions by phone against a number you already trust (wire fraud in syndication). If the raise does not close, escrow returns the money. On DoorRaise, a raise that fails or does not close refunds investors in full.
Our take
Convenience for the investor is not worth risk for the deal. A wire is a small hassle that makes the money final, traceable and matched to a name. If an investor insists on another route, a wire from their own bank is usually only a phone call away.
Trade-offs and who this is not for
- A wire is less convenient than a card. That friction is the point.
- Not for investors who want rewards points on a large investment.
- Common mistake: accepting a check and counting it as funded. Wait for clearance.
- Not a substitute for counsel or your bank's own rules.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings with 5+ units from friends and followers who already trust them, under Rule 506(b) or 506(c). We are software, legal document preparation, escrow coordination and verification services. We are not a law firm, broker-dealer, investment adviser, funding portal, bank or escrow agent, and we do not hold investor money: investors wire their money to escrow at Enterprise Bank & Trust, in the deal's name.
DoorRaise funding is by wire only. Investors sign first, then wire instructions appear only once the deal's escrow is open, and wires are tracked against the signed subscriptions. There is no card, check or crypto option. Flat fees, never a percentage of the raise (see pricing). Create your free sponsor page.
FAQ
Can an investor pay with a personal check?
It is not how DoorRaise deals fund. In general it is possible, but the check must clear before the money counts.
Can investors invest with a credit card?
Not on DoorRaise. Cards can be reversed, which is a poor fit for a closing.
Can I accept Bitcoin for my syndication?
Securities law does not forbid it, but banks, escrow and tax rules make it hard. Ask the investor to wire dollars.
Is a wire reversible?
A completed wire is hard to reverse, which is why you must verify the instructions before sending.
Sources
This article is general information, not legal, tax or investment advice. Talk to a securities attorney before you market an offering. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.