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Overstock’s tZERO Starts Giving Investors Control Over Its Security Tokens


Photo: tZEROblockchain / Instagram

Last August, Overstock’s subsidiary announced that its security token offering would close, having raised $134 million out of the maximum amount of $250 million previously specified. In June 2018, tZero had also signed a letter of with investment company GSR Capital for the purchase of $160 million in tZero Security Tokens.

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The ICO of tZero opened in December 2017 and raised $100 million in the first day of funding. Patrick Byrne, tZero executive chairman and CEO of Overstock then confirmed that tZero is planning to use the money raised to help launch multiple tokenized securities exchanges around the world in parallel with its SEC-licensed U.S. operation. “Ultimately, the nature of these tokens, they can be cross-listed across exchanges in every jurisdiction,” Byrne said. “And that’s really the vision on a global scale.”

“The issuance of the world’s first public cryptosecurity, OSTKP, in 2016 was tZERO’s Chuck Yeager moment: we broke the speed of sound by introducing the concept of real-time trade settlement. Today marks our Yuri Gagarin moment, where we leave behind the confines of the known world of traditional capital markets and take the first steps towards a new market powered by blockchain.”

According to tZero CEO Saum Noursalehi’s letter, investors now have the option of choosing where to hold their security tokens, either by creating a brokerage account with Dinosaur Financial Group, a tZero partner and broker dealer, or holding them in a person wallet with a two-step verification system. He confirmed that as of October 12, 2018 they completed the issuance of the tZero security tokens. The tokens have been locked up in wallets maintained by tZero on behalf of our token holders for 90 days following the issuance.

“Now that the three-month lock-up period has concluded, you must decide where to hold your security tokens. This is one of the first Security Token Offerings on a decentralized public network, and was conducted in full compliance with the U.S. securities laws. This is an exciting milestone for tZERO, and we are even more enthusiastic about the opportunities this will create for private and public companies wishing to raise capital through security token offerings, and for investors who wish to trade those securities.”

Anticipated Start of Actual Trading Still Not Announced

So far, the company has not announced when it intends to start trading their security token. In the letter tZERO recommends that investors should wait for another update as to when the trading is to begin.

In an interview last year, the president of Medici Ventures company that is in charge of the Overstock’s strategy in the blockchain field, Jonathan Johnson, mentioned that tZERO will begin operating in January 2019. A prototype of it was unveiled last April.

To ensure compliance with federal securities law and regulations, and in accordance with the terms of the tokens themselves, the tokens will be locked up in the custodial wallet until January 10, 2019 (90 days after issuance).

After the 90-day period expires, tZERO intends on offering holders the opportunity to trade tokens, pursuant to private resale transactions, with other accredited investors on a platform that tZERO is in the process of developing with a broker-dealer partner. In addition, tZERO intends that new investors who are accredited will also be able to open an account to buy tokens following the 90-day period.

tZERO also plans to designate an approved trading platform by August 6, 2019, one year after consummation of the STO, so holders may then resell their tokens to non-accredited investors. tZERO also plans to register the securities to enable secondary trading in more robust trading environments, such as the domestic (USA) exchange it is building in partnership with BOX Digital Markets, as well as international securities exchanges.

In April last year, the company has delayed the launch of the final version of the trading platform until May as it is still developing further regulatory compliance.

tZero is a fully-owned subsidiary of Overstock that focuses on fintech development using the blockchain technology. Since its launch, the company has been committed to bring greater efficiency and transparency to capital markets with the use of the blockchain technology.

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