What Happened to PeerStreet? The Full Story of a Real Estate Crowdfunding Collapse

If you're reading this, it's probably because you had money in PeerStreet, you're considering a platform that reminds you of PeerStreet, or you just want to understand what happens when a real estate crowdfunding platform fails.

All three are good reasons. Because what happened to PeerStreet isn't just a cautionary tale — it's a blueprint for every risk that the real estate crowdfunding industry would prefer you not think about.

The Rise: How PeerStreet Became a $5 Billion Platform

PeerStreet launched in 2013 with a compelling pitch: give everyday investors access to high-yield, short-term real estate loans. Instead of buying property or investing in long-term equity deals, you could fund 6-24 month bridge loans and fix-and-flip loans, earning 6-12% interest with real estate as collateral.

The model looked elegant:

• Borrowers (property flippers, developers) got faster access to short-term capital
• Investors earned monthly interest payments backed by real property
• PeerStreet took a spread on every loan for connecting the two sides

The founding team had credibility. Brett Crosby was a co-founder of Urchin, the web analytics company Google acquired in 2005 (it became Google Analytics). The team attracted serious venture capital — over $60 million from names like Andreessen Horowitz, World Innovation Lab, and Colchis Capital Management.

By November 2022, PeerStreet's homepage boasted:

• $5 billion+ in total loans transacted
• 47 states represented
• $280 million+ in interest returned to investors

They even launched "PeerStreet Pocket," a cash management account offering 4% interest. Everything looked like a thriving fintech success story.

The Cracks: What Went Wrong

Behind the headline numbers, the business was falling apart. Here's what actually happened — in order.

1. Loan Quality Was Terrible

This is the foundational failure. PeerStreet wasn't just originating loans — they were buying loans from third-party originators through a marketplace model. The incentive structure was broken from the start: PeerStreet earned fees on loan volume, not on loan quality. The more loans they funneled to investors, the more money they made — regardless of whether those loans performed.

By the time of the bankruptcy filing, the numbers were devastating:

A 58% non-performing rate is catastrophic: more than half of the loans behind investors' notes were at least 30 days late when the company filed. The figures come from the first-day declaration of PeerStreet's restructuring officer (Case No. 23-10815, Docket No. 3); the $127.8 million non-performing figure is our arithmetic ($220.2 million minus the $92.4 million performing).

2. Interest Rates Rose and Volume Collapsed

PeerStreet's business model depended on continuous loan origination. When the Federal Reserve began its aggressive rate-hiking cycle in 2022, the short-term real estate lending market froze. Fix-and-flip deals that made sense at 5% mortgage rates stopped making sense at 7-8%.

Loan origination volume plummeted. Revenue dried up. And the company's operating expenses — built for growth — couldn't adjust fast enough.

3. Venture Capital Dried Up

In 2022, the venture capital market contracted sharply. PeerStreet, which had raised $60M+ in VC funding, was unable to raise additional capital. The company's court filings explicitly stated that it "was not able to access material funding to mitigate the loss of revenue caused by market conditions."

Without new capital and without origination revenue, the company was burning cash with no lifeline.

4. The Layoffs Told the Story

Four rounds of furloughs and layoffs in 13 months. From 281 employees to 28. When a company sheds 90% of its workforce in just over a year, the end is near — and any investor paying attention to Glassdoor reviews or LinkedIn departures could have seen it coming.

5. Loan Servicing Fell Apart

With a skeleton crew, PeerStreet could no longer properly service its loan portfolio. Foreclosure proceedings that should have started within 30 days of a missed payment dragged on for months.

The Bankruptcy: June 26, 2023

PeerStreet and fourteen affiliated entities filed voluntary petitions for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware on June 26, 2023 (Case No. 23-10815, Judge Laurie Selber Silverstein).

The filing was framed as an orderly wind-down — not a reorganization. PeerStreet wasn't trying to save the business. It was trying to liquidate assets and return what it could to investors.

What Happened to Investor Money

The news wasn't entirely terrible — at first:

• Uninvested cash: In October 2023, the bankruptcy court approved releasing 95% of uninvested cash balances back to investors. If you had money sitting in your PeerStreet account that wasn't in an active loan, you got most of it back.

• PeerStreet Pocket (RWN): Not cash, and not safe. Pocket holders received $10.5 million in PeerStreet's October 8, 2025 distribution, and on December 17, 2025 PeerStreet charged off $7.0 million on Pocket loans that had liquidated before the Plan Effective Date. This was especially painful because Pocket was marketed as a cash-like product — investors thought it was safe.

• Active loans (MDPN): This is where most of the money was. On December 17, 2025 PeerStreet issued charge-offs of $22.2 million on Mortgage Dependent Promissory Notes for loans that had liquidated before the Plan Effective Date, and said those are now fully distributed with nothing further to come. The Plan's own estimate for the notes that had not yet liquidated was a range of 0% to 90%, which is the single most important number in this case and the one nobody quotes. An external asset manager approved by the bankruptcy court is still working to liquidate remaining loan assets, but recovery is uncertain and slow.

Where Things Stand Now (August 2026)

Nearly three years after filing, the bankruptcy is still not resolved:

• A Plan Administrator is overseeing claims reconciliation
• A hearing in December 2024 addressed approximately 250 claims
• Tax documents for 2024 taxable events were published January 24, 2025
• Fractional-note (MPDN) claims are paid only from the proceeds of each note's own loan, after estate costs in the Plan's waterfall, and the Pocket notes were unsecured — despite marketing that implied direct real estate backing

The PeerStreet website is still online, showing its old marketing content from 2022. There is no prominent bankruptcy notice on the homepage. The bankruptcy updates page exists at /content/bankruptcy/updates but isn't linked from the main site.

The Other Failures: PeerStreet Wasn't Alone

PeerStreet is the most prominent example, but it's far from the only real estate crowdfunding platform to fail. Here's the complete picture:

For the full Patch of Land forensic — including the corrected ownership chain (Wikipedia is wrong), the DFPI license revocation PDF, and the playbook for legacy noteholders trying to recover — see What Happened to Patch of Land (2026).

CrowdStreet: Outright Fraud

CrowdStreet's failure was different from PeerStreet — it wasn't platform incompetence but sponsor fraud. Nightingale Properties CEO Elie Schwartz raised $63 million from CrowdStreet investors in 2022 for two commercial real estate deals. He spent most of it on himself.

In December 2024, federal prosecutors in Atlanta charged Schwartz with one count of wire fraud; he was accused of misappropriating roughly $54 million of the $63 million he raised, Bisnow reported. He pleaded guilty in February 2025. On May 19, 2025, he was sentenced to 87 months (7+ years) in federal prison and ordered to pay over $45 million in restitution, according to the Justice Department. Separately, he had signed a settlement in October 2023 agreeing to pay investors back, Bisnow reported.

Over 800 investors were affected, and only 13% of investor funds had been returned by the time of sentencing, CRE Daily reported. In March 2025, investors filed a class action in Texas seeking to rescind more than $1 billion of pre-2023 investments, alleging CrowdStreet acted as an unregistered broker-dealer. Separately, 125 investors brought a claim alleging CrowdStreet marketed a different Nightingale deal without proper due diligence, over $7.25 million lost.

Yieldstreet → Willow Wealth: The $208 Million Rebrand

Yieldstreet might be the most cynical story on this list. The platform lost at least $208 million of investor money across marine loans ($89M wipeout in September 2025), additional losses ($78M previously), and recent real estate defaults in Houston and Nashville ($41M disclosed in late 2025).

Their response? Rebrand to Willow Wealth in late 2025, remove a decade of performance data from public view, and hope nobody notices.

Mark Williams, a former Federal Reserve bank examiner and Boston University professor, told CNBC the company is "making it harder to uncover their poor performance by removing the stats, which is alarming."

When a company changes its name after losing $208 million of investor money, that tells you everything you need to know.

Prodigy Network: The Founder Who Died

Prodigy Network said it had raised nearly $650 million from about 6,500 retail investors for commercial real estate projects in New York and Chicago. When distributions stopped in 2019, lawsuits flooded in. Investors alleged misleading marketing, poor governance, and questionable investment strategies.

According to the Chapter 7 trustee, founder Rodrigo Niño “purported to resign as CEO” in or around June 2019 but kept control of the firm, and he died of cancer in May 2020. The company and 10 affiliates filed for Chapter 7 bankruptcy on March 25, 2021; the parent, Prodigy Network, LLC, listed $10,000 of assets against $6.23 million of liabilities. As of October 2026 the case is still open and no distribution to creditors appears on the docket (full record).

RealtyShares: Wound Down, Then Chapter 7

RealtyShares was one of the original wave of real estate crowdfunding platforms after the 2012 JOBS Act. The company's own ten Form D filings report $58.8 million sold (our sum), and its website claimed more than $870 million invested through the platform. It stopped raising new money in late 2018; in 2019 IIRR Management Services was hired to manage the existing portfolio, and RealtyShares, Inc. filed for Chapter 7 in the Northern District of California on July 31, 2020 (case 20-30621) (full record).

No fraud, no scandal — just a business that couldn't sustain itself. Which, in some ways, is the most important lesson: even well-intentioned platforms can fail.

The 7 Warning Signs Investors Missed

Looking back at PeerStreet — and every other failure on this list — the warning signs were there. Most investors just didn't know what to look for.

1. Volume Over Quality

PeerStreet was a marketplace that earned fees on loan volume. They didn't hold the loans themselves. When the platform's incentive is to push more loans through the pipe regardless of quality, underwriting standards inevitably slip. Ask yourself: does this platform make money when I make money? Or do they make money regardless?

2. Opaque Default Rates

PeerStreet never published clear, audited default rate data before the bankruptcy. If a platform won't tell you exactly how many of their deals have defaulted, failed, or underperformed vs. projections — that's a red flag.

3. Employee Attrition

PeerStreet went from 281 to 28 employees in 13 months. Mass layoffs at a financial platform should trigger an immediate review of your exposure. Track your platforms' headcount on LinkedIn. If it's dropping fast, get concerned.

4. Slowing Communications

In the months before filing, PeerStreet's investor communications became less frequent and less detailed. When a platform that used to email you monthly starts going quiet, pay attention.

5. "Cash-Like" Products That Aren't Cash

PeerStreet Pocket was marketed as a cash management product offering 4% interest. Investors treated it like a savings account. It was not cash: the Pocket notes were unsecured, and in December 2025 PeerStreet charged off $7.0 million on Pocket loans. If it's not FDIC-insured, it's not cash — no matter what the marketing says.

6. No Skin in the Game

PeerStreet didn't co-invest in its own loans. They collected fees on origination and servicing, win or lose. Platforms where the operators don't have their own money at risk have a fundamentally different incentive structure than platforms where they eat their own cooking.

7. Dependence on Continuous Growth

PeerStreet's operating expenses were built for growth-stage volume. When origination slowed, the business model collapsed. Any platform that needs constant new investment to cover operating costs is structurally fragile. Ask: could this platform survive a 50% drop in new investment for two years?

What to Look for in a Platform (Post-PeerStreet)

After watching multiple platforms fail, here's the due diligence checklist every investor should use:

Platforms That Have Survived (And Why)

Not every platform has failed. Several have operated for years, survived rate hikes, and continued delivering returns to investors. Here's who's still standing and why:

• Fundrise (since 2012): Vertically integrated — they originate, manage, and hold investments. Revenue tied to AUM, not transaction volume. Has survived multiple market cycles. Published track record. Recently launched NYSE-listed fund.
• Groundfloor (since 2013): Direct originator of short-term loans. Has weathered rate cycles. Zero investor fees. Published default and recovery data. Responded to PeerStreet's bankruptcy by publicly explaining how their model differs. That said, our Groundfloor Notes review found going-concern qualifications in both Note-issuing entities' SEC filings — "survived" is not the same as "risk-free."
• Arrived Homes (since 2020): Younger but well-capitalized ($60M+ from Bezos, Benioff, Rascoff). SEC-qualified under Reg A+. Each property in its own LLC. Launched secondary market in November 2025.
• EquityMultiple (since 2015): Accredited-only focus limits growth pressure. Has survived rate environment. Institutional-grade underwriting.

The pattern is clear: platforms that survived are ones with sustainable revenue models, proper underwriting, transparent reporting, and enough capitalization to weather downturns. PeerStreet had none of these in sufficient measure.

The Bottom Line

PeerStreet's story is not about one bad company. It's about the structural risks that exist in every real estate crowdfunding platform — and the consequences of ignoring them.

The platform transacted $5 billion. It was backed by Andreessen Horowitz. It had a slick interface, professional marketing, and impressive-sounding metrics. None of that protected investors when the underlying loan quality was rotten and the business model couldn't survive a change in market conditions.

If you take one thing from this article, take this: the brand name on the platform does not protect your money. Only diversification, due diligence, and an honest understanding of the risks can do that.

The platforms that survived the PeerStreet era — Fundrise, Groundfloor, Arrived — survived because their models were built differently. Not perfectly, not risk-free, but differently enough to weather the storm. Understanding why some platforms survive and others don't is the single most important skill for any real estate crowdfunding investor.

Want to invest in platforms that have survived? Read our honest reviews of Groundfloor, Arrived Homes, and see the Fundrise vs Arrived Homes comparison. For a broader view, check our complete guide to real estate crowdfunding risks and returns data for every major platform. For the structural lesson PeerStreet's bankruptcy taught us — which platforms have legally bankruptcy-remote investor structures and which don't — see our bankruptcy-remote real estate crowdfunding pillar. Sitting on PeerStreet losses? The Real Estate Crowdfunding Tax Loss Harvesting (2026) forensic guide covers the §165(g) capital loss timing for confirmed claims (Plan Effective Date May 2024) and the §6511(d)(1) 7-year statute of limitations that lets you amend back to 2019.

All data in this article is sourced from court filings (Case No. 23-10815, U.S. Bankruptcy Court, District of Delaware), PeerStreet's official bankruptcy updates page, CNBC, HousingWire, Bisnow, The Real Deal, BusinessWire, Crowdfund Insider, the U.S. Department of Justice and the FCA. Where this page links to another platform, the box above states plainly whether we are paid for it.

For a live example of the same end-stage mechanics being disclosed in real time, see what Landa investors actually got back: twelve property sales in 2026 where nine returned exactly nothing, transcribed from the Form 1-U filings.