YieldStreet’s Real Estate Collapse: Fintechs in Alternative Investments
What is it with Fintech platforms with the word Street in their name? First was PeerStreet (Read one of our most popular articles about its failure), and now YieldStreet. CrowdStreet is another one facing challenges.
These failures are a bit different from each other but at the heart of the issue is poor operational management, and lack of proper risk management. In YieldStreet’s case there are also multiple cases of misrepresentation.
Background and Business Model
YieldStreet is a fintech platform founded in 2015 to democratize access to alternative investments. YieldStreet offers retail investors access to private market assets such as real estate, litigation finance, and marine loans. The platform attracted over 500,000 members and facilitated more than $6 billion in investments since inception. Its core promise was to deliver high-yield, low-volatility returns through carefully vetted deals, often marketed with slogans like “Invest like the 1%.”
The Collapse of Real Estate Investments in 2025
The scope of investor losses on YieldStreet’s real estate investments was dramatic and far-reaching. According to CNBC, out of the 30 real estate deals totaling 370 million committed by investors they reviewed, 4 were declared total losses, 78 million were in default and 23 more landed on an internal “watchlist” for performance concerns, signaling the high likelihood of further loss. YieldStreet’s real estate returns, once touted as a consistent 9.4% as recently as 2023, plummeted to a mere 2% by 2025, devastating those who placed their trust in the platform’s highly marketed promise of high, stable yields. One investor was quoted stating they lost $400,000—$300,000 invested in a luxury apartment project that failed, and another $100,000 in a commercial renovation project. These cases highlight not just the scale of the financial damage, but also the impact felt by individuals who believed in YieldStreet’s vision of democratizing access to alternative investments.
Contributing Factors
Several critical factors contributed to the collapse of YieldStreet’s real estate investment platform, each compounding the challenges faced by investors and the company alike. Foremost among these was the sharp rise in interest rates and heightened market volatility between 2023 and 2025, which dramatically affected property valuations and made it more difficult for real estate projects to remain profitable or even solvent. Internally, YieldStreet suffered from poor underwriting practices, as loans were frequently issued without sufficient due diligence regarding borrowers’ financial stability or the viability of the underlying projects. This lack of proper risk assessment meant that the company failed to adequately vet borrowers, exposing the platform and its investors to a higher probability of default. These operational shortcomings were exacerbated by a failure to implement robust risk management protocols, allowing questionable deals to pass through their pipeline with insufficient scrutiny. YieldStreet’s marketing also played a significant role: the platform aggressively promoted these real estate deals as low-risk opportunities, often promising attractive returns in the range of 8–12%. However, these assurances were not matched by the actual risk profile of the investments, leading many retail investors to commit significant amounts of capital under the false impression of safety and stability.
Similar to PeerStreet, it appears YieldStreet had also taken in too much money and was more focused on getting deals done so they could get the cash out the door and collect fees, instead of staying inside appropriate risk guidelines. They then further misrepresented the details of the trades to investors.
Learn to differentiate between managers who are experts and imitators. Read our article on “How To Sniff Out Imitators” here.
Historical Red Flags
As investors you must perform verification and background checks. One of the simplest background checks is an internet check. Artificial Intelligence is making this process even easier. These historical claims are publicly available and indicate a history in which management did not disclose certain investment information and provided inaccurate assessments of risk. Operational violations have also been documented.
Verify, verify, verify! Dive into the details about the essentials of due diligence verification by watching our short video here.
Current SEC Enforcement Action:
In 2023, the SEC charged YieldStreet for failing to disclose material risks in a $14.5 million marine loan offering. YieldStreet knew the collateral (a ship) was likely unrecoverable but proceeded with the offering.
The SEC further found violations of antifraud provisions and imposed $1.9 million in penalties and disgorgement.
Class Action Lawsuit and Settlement
A $9 million settlement was approved in early 2025 for investors affected by high-risk offerings between 2018–2020. The lawsuit focused on marine vessel loans and vessel deconstruction deals, which were misrepresented as low-risk. Investor were paid out $6.2 million in cash compensation and $2.75 million in waived fees.
Ongoing Investigations
Zamansky LLC is currently pursuing these recent allegations and occurrences via FINRA arbitration on behalf of investors, alleging YieldStreet misled them about risks and performance.
Some of you might say all these allegations apply mostly to their lending deals. In my history of performing due diligence on investments, if you find something rotten, that rot stretches farther than you realize, especially in times of stress. If you find a manager with historically negative news, that should be one of your non-negotiable investment factors. There are a ton of investments out there; just get to your “no” and move on.
Invest with Confidence: Learn how to determine your non-negotiables and get to your 'No' faster. Watch this video now (checklist included)!
What is next?
Investors have been misled, and you can now expect a further lack of transparency and longer delays in updates. Multiple forums on Reddit and Facebook are revealing and discussing dozens of similar cases. This suggests that these issues might be just the tip of the iceberg, and you can expect further systemic issues.
YieldStreet is now in a tough spot. The combination of old and new legal settlements and regulatory scrutiny will lead to stricter compliance protocols and revised underwriting standards. Service providers are expected to withdraw liquidity and related functions, as YieldStreet is considered a high-risk business partner. Any potential assistance is likely to be offered on unfavorable terms due to the distressed nature of the situation. Lenders are unlikely to show flexibility, given their need to protect their balance sheets, especially in light of the challenges faced by banks and lenders from 2022 to 2024. This further hit to reputation should eliminate access to future both institutional and retail investors. With many doors being closed and only raiders looking to help them out, YieldStreet will have to restructure all its portfolios and potentially must liquidate with steep discounts.
For Investors at YieldStreet there will be a mad dash to try and get out of all their products. If you do not, you will run the risk of being part of the last group of investors holding nothing but massively distressed assets. Investors should expect partial recoveries, gating, and long lockups.
Conclusion
YieldStreet’s failed trades echo’s the cautionary tale in the world of fintech-driven alternative investing. While the platform promised access to high-yield opportunities once reserved for institutional investors, its strategy faltered under market pressure and internal mismanagement. The fallout has triggered regulatory action, legal settlements, and a crisis of confidence. As investors you must take ownership of due diligence and on-going due diligence of an investment. There were clear discoverable red flags that were public. If YieldStreet attempts to recover, its future will depend on its ability to rebuild trust, improve transparency, and deliver on its original mission. I think they also need to have a complete shift of management and risk/credit teams. There are so many funds out there with great managers working hard to provide investors with access to alternative investments, with all these red flags it might be time to move on.
To get you started, download our short e-book on “How to Perform Due Diligence” here.
