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Overstock.com Alternative Trading System (ATS) tZERO Suffers from Stale Markets as Price Hits a Low
Recent reports have shown that after about three weeks since the much anticipated start of an Alternative Trading System (ATS) for security tokens by Overstock.com, there haven’t been a lot of transactions with the platform. The system’s own tZERO Preferred (TZROP) has had its daily volume, oscillating between 7,000 and 23,000 units.
On its own, the number might seem average but when compared to the 26 million TZROP allotted at the $134 million security token offering (STO), then the number is really nothing. Maybe only a minute portion at best.
More about tZERO Transactions
According to reports, about a thousand different investors were authorised for the initial sale but only a small percentage of these investors were involved and committed on the platform at the time it kicked off.
Information also has it that users who were not a part of the initial security token offering and only joined after the kick off, constitute about 15 percent of the company’s current pool of traders. This was revealed by the CEO of the tZERO Group, Saum Noursalehi.
Even though during the STO, TZROP was priced at $10, it was $8 on the 28th of January as trading commenced but later dropped to a price of about $3. The price fluctuations seemed to continue to the point where dealers were transacting at $1 before it recently went up to $3.
A lot of traders seemed to use this as a chance to sell off a good percentage of their tokens and later re-purchase them at a reduced price.
Possible Explanation for the Sales Squeeze
Some traders insist that the sales situation happened like that because of the first investors who invested into the token at the initial coin offering (ICO).
They went ahead with this without really digesting the actual environment surrounding the token and were only consumed with the idea of making a substantial turnover. Mark Nelson, one of the traders, said:
“From discussions with other TZROP holders, many of them don’t really understand what tZERO is and what type of investment they were making, they clearly did not read the offering details and just jumped in on hype from the general ICO craze expecting to double their investment in short order — unrealistic expectations.”
He also said that “those investors and others who likely lost their shirts in the last 6 months on crypto and maybe even traditional market investments and the ones selling now.”
A few procedural setbacks have also been noted. For example, there have been complaints that verification and authorisation of accounts by Dinosaur Financial – a broker/dealer – takes a week to be completed. It’s also been noted that transactions involving transference of both fiat and token to regular brokerage platforms, always takes more than a few days.
One customer, Andrew Marks, has said that it takes longer than usual to receive cash from token sales. He said:
“I haven’t withdrawn cash yet, but I did sell some shares. It took one day for the sale proceeds to appear in my Dino account,” he explained. “I sold shares on Wednesday and the cash appeared Thursday. I was expecting cash to appear instantly — let’s just say I would expect to see my available cash in my Dino account immediately after the sale.”
The Future of tZERO
Regardless of all the issues, Saum Noursalehi has said that there is an expectation for more transactions and for the average price of tokens to increase by the time retail investors are finally allowed to trade. Mark Nelson also said that
“I do expect the value to only be depressed for a short period of time and recover fully and even be above $10 prior to August opening of trading for all investors.”
Overstock CEO Patrick Byrne Informs tZERO is Launching Next Week, a Big Moment of Four Years
Overstock.com will be launching the new security token trading platform tZERO as soon as the end of the next week. The information was released by Patrick Byrne, the CEO of the company in a recent conversation with CoinDesk.
Although he explained that they could be launching the platform even today, they are waiting some more time to process user signups.
This announcement is very important because it shows that the company will be following its timetable. Jonathan Johnson, Overstock’s venture funds and tZERO’s parent company said back in December that they wanted to go live as soon as in January.
tZERO has already informed investors that they already have access to their tokens and they can create a brokerage account or just save the tokens in a personal wallet. Dinosaur Financial Group is offering brokerage services to tZERO investors and users.
Steven Hopkins, the former COO and general counsel at Medici will be leading tZERO as a president. At the moment, there is no information regarding who is going to be in the other two executive positions. As soon as the platform is launched, users will be able to trade tZERO tokens and many other tokens created by other companies.
The intention is to disrupt the current security trading market. During 2019, security tokens could be one of the main attractions after a very hard second half of the year in 2018 for Initial Coin Offerings (ICOs).
Back in December, the company worked with GSR Capital, a firm located in Hong Kong, to create a token and start trading cobalt. GSR has also purchased $30 million in tZERO tokens.
Overstock has always shown interest for the cryptocurrency market. After being compliant with all the required regulations, it seems that the firm is ready to launch its so awaited platform for security tokens.
Overstock's tZERO Mint Security Tokens Are Locked for 90 Days, Trading Platform in Development
tZERO has Released Its Preferred Security Tokens
tZERO is a global leader in the blockchain innovation world for capital markets. Today, it announced that it had completed the issuance of the preferred tZERO security tokens. The tokens were issued to its investors who fully funded the signed agreement for future equity before the August 6, 2018 close of their security token offering. The company managed to get over $134 million during the STO from over 1000 investors globally.
This Move Is Significant
According to the CEO of tZERO Saum Noursalehi, this was one of the first Security Token Offerings of a public blockchain to be conducted in full compliance with US laws. He added that it was an exciting milestone for tZERO. This will add enthusiasm about the opportunities it would create for public and private companies who wish to raise capital via STOs.
What tZERO Accomplished
tZERO issued the token contract, minted the security tokens, and issued them into the tZERO custodial wallet on behalf of investors on October 12, 2018. To ensure they complied with federal securities laws, and are in line with the terms of the tokens, they will be locked up in a custodial wallet until January 10, 2019.
After this 90-day period has expired, tZERO will offer holders of the tokens the chance to trade the tokens, pursuant to private resale. This will take place with other accredited investors on the platform. tZERO is currently working to develop this capability with a broker-dealer partner. Additionally, tZERO will ensure that new accredited investors will be able to open accounts and buy tokens after the 90-day period.
According to the CEO and founder of Overstock.com and the executive chairman of tZERO, the issuance of the first public crypto security OSTKP in 2016 was their Chuck Yeager moment. They had managed to break the sound barrier by introducing real-time trade settlement.
He added that the release of these tokens marked their Yuri Gagarin moment. They are now leaving behind the confines of the known world of traditional capital markets and moving towards a new market powered by the blockchain.
The executive chairman humbly thanked everyone that had shared the belief of a system of securities trading that is based on transparency, trust, and integrity via crypto technology. This is as opposed to the current system where all are at the mercy of middlemen who might not always have the interests of investors at heart.
The Next Stage
tZERO is planning to designate an approved trading platform. This will occur by August 6, 2019. This is a year after consummation of the STO. Holders will be able to resell their tokens to non-credited investors.
Additionally, tZERO is planning to register securities to enable secondary trading in a more robust trading environment. For instance, it is working on a US exchange in collaboration with BOX Digital Markets. It also plans to release an international securities exchange for those outside the US.
It was created in 2014 with the aim of using the blockchain to revolutionize Wall Street. Thus far, it has made some solid strides towards that goal.
Overstock’s Q4 2018 Results Shows the Company’s Crypto Initiative is Paying Off, tZERO Excitement
Overstock’s Q4 2018 Results Shows The Company’s Crypto Initiative Is Paying Off, tZERO Excitement
Overstock.com, Inc., a leading U.S. online retailer, and advancer of blockchain technology has reported its financial results for Q4 2018, and the firm says it plans to counter its losses for last year with a return to winning ways this year, according to a press release by the firm on March 18, 2019.
Overstock Gunning for the Top
As stated in its Q4 earnings report published March 18, the highly reputed firm has made it clear that it plans to erase all of the losses encountered in 2018 this year.
According to the firm, it’s last year’s losses were brought about by a change of strategy; however, the team is now poised to do things correctly this 2019.
“Our blockchain projects are among the most significant and cutting edge platforms in the world, and we are just reaching the point where our products are being introduced to the public,” said CEO and Founder of Overstock.com, Patrick Byrne.
Earlier in January 2019, Overstock announced the commencement of secondary trading of tZERO security tokens through a digital securities brokerage account at Dinosaur Financial Group, LLC.
“tZERO brought live a security token trading platform. Our retail arm lost money last year because I gunned things in an attempt to create a conventional high-growth/money losing e-commerce business, but the losses were disgusting, and we reverted to our philosophy of profitability. As a result, in 2019 Retail will return to profitability, generating a positive operating cash flow of roughly $10 million,” Byrne added.
A Decent Result
Notably, tZERO recorded pre-tax losses of about $12.6 million in Q4, but Byrne is optimistic that the firm will perform better this year.
Despite the fact that Chinese investment firm, GSR Capital and Makara Capital, a Singapore-based private equity firm significantly reduced their investments in tZERO from the $404 million initially proposed in 2018, to just $100 million earlier in March 2019, tZERO still managed to generate more than $80 million in total profits.
“The previously-announced GSR equity investment in Overstock and tZERO has not been completed; however we are discussing with GSR Capital and Makara Capital. Both have recently signed an MOU with tZERO, stating that they would co-lead an investment of up to $100 million in tZERO common stock and close the transaction in April subject to due diligence and regulatory approval,” said Byrne at the time.
As reported by Bitcoin Exchange Guide in February 2019, the crypto market downturn took its toll on Overstock’s Alternative Trading System (ATS), drastically crashing transaction volume on the platform.
With the price of bitcoin now trying to overcome the bear market by surpassing the $4k price area, it remains to be seen whether 2019 will be a year for the bulls indeed.