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Report: Cryptocurrency-Financed Deal To Buy Plaza Hotel Falling Apart

The Plaza Hotel in New York is closed amid the coronavirus.

One of New York City's most iconic properties was set to become a test case for cutting-edge financing methods and technology, but the deal appears to be on the verge of falling apart.

In March, a group of foreign investors had proposed an "initial coin offering" to fund the purchase of the Plaza Hotel in Manhattan, CNBC reported. The deal has not gone as planned, and multiple investors "have walked away from the deal, and it is failing to attract enough investors," Business Insider reports.

Chimera, an entity controlled by Dubai-based mining mogul Shahal Khan, had planned to pay $675M for the hotel, and finance $375M by offering a chance to buy equity in the Plaza through a cryptocurrency offering backed by the hotel. 

The Plaza is owned by Sahara Group, which is controlled by Subrata Roy, an Indian magnate who was jailed in 2014 for not paying back bond investors before being released in 2016. Roy, who is trying to dispose of his offshore assets, put the hotel up for sale in August 2017 and has received multiple offers for close to the $570M Roy paid for it in 2012, according to the Wall Street Journal.

Kevin O'Leary, an investor on "Shark Tank," alluded to the deal on a TV appearance, hyping it as a "$400M coin issuance for a real asset you've heard of," BI reported. President Donald Trump bought the hotel in the late 1980s before eventually declaring bankruptcy on it and selling it 1995.

Days after Sahara's marketing of the property was reported, the group that controls a minority stake in the hotel, including a Saudi prince, made its intention clear to buy the majority stake by exercising a clause that allows it to match any offer for Roy's 75% stake in the property. 

It is unclear if the uncertainty around the minority ownership's position or the uncertainty around the use of an initial coin offering for such a valuable, historic property, is causing the sputtering of the plan's momentum before it even begins.