In the aftermath of the allegations that Nightingale Properties embezzled $40M from investors on the CrowdStreet real estate crowdfunding platform, CrowdStreet's competitors moved to shore up confidence among their customers that their funds were safe.

The scandal has rocked the real estate crowdfunding industry, which has only existed in the past decade, leading to concerns that investors will put their dollars elsewhere.

But analysts say the value proposition of real estate crowdfunding — allowing developers to raise millions in equity in a matter of hours, in some cases — is too great to ignore. The scandal is more of a wakeup call that bad actors exist, rather than an existential crisis, they say.

Either way, as one platform's CEO put it to Bisnow National Reporter Dees Stribling, "anything that could hurt the [industry's] reputation could hurt its growth."

—Ethan Rothstein, Bisnow Deputy Managing Editor