Overstock updates on proposed tZERO equity investment

GSR Capital and Makara Capital are set to co-lead an investment of up to $100 million in tZERO, US online retailer Overstock's crypto offshoot

The pair have inked a Memorandum of Understanding (MoU) to make the investment in tZERO’s common stock in April, subject to due diligence, negotiation of binding contracts and regulatory approval.

“The investors would also assist with tZERO’s expansion in Asia and other regions of the world and link them with other key partners from their portfolios,” said Overstock CEO and Founder and tZERO Executive Chairman Patrick Byrne.

Hong Kong-based GSR Capital first announced the investment in August last year. The initial plan was to buy $30 million worth of tZERO tokens from Overstock and also invest up to $270 million in the company at a valuation of $1.5 billion, giving it an 18% stake.

tZERO CEO Saum Noursalehi said at the time: “We are honoured to have GSR Capital as a strategic investor. The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalise our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

The deal did not close, however, although tZERO claims that it “remains in discussions with GSR Capital and Makara Capital, a key partner of GSR Capital, regarding a potential transaction”.

“Following the recent successful launch of tZERO’s new security token trading technology, we are excited by the emerging partnerships and business opportunities in front of us. More information on Overstock’s retail and blockchain properties will be shared within our upcoming 2018 FY earnings reporting,” Byrne concluded.

“We’ve got cold fusion on the blockchain side”

Late last year, it emerged that Byrne was looking to sell the retail arm of his company and devote his time to blockchain projects.

Overstock’s blockchain subsidiary Medici Ventures lost $22 million in 2017, while in the first nine months of 2018 it burnt through $39 million. Overstock also racked up a net loss of $163 million in the first three quarters of last year.

But Byrne insisted he didn’t “care whether tZERO (backed by Medici) was losing $2 million a month. “We think we’ve got cold fusion on the blockchain side.”

Minds

Also late last year, crypto social network, Minds, landed a $6 million Series A investment from Medici Ventures.

“There has been increasing excitement in recent years over the power of blockchain technology to liberate individuals and organisations,” said Byrne. “Minds’ work employing blockchain technology as a social media application is the next great innovation toward mainstream use of this world-changing technology.”

Minds has launched the $MINDS crypto token on the Ethereum mainnet, as a way for users to boost their content, subscribe to media subscriptions and access exclusive content. The tokens can also be earned for engagement received on the platform.

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