ICO Market Transformed by ATS Security Token Joint Venture Forged by tZERO, RenGen and the Argon Group

First SEC and FINRA compliant ATS to transform the initial coin offering market

SALT LAKE CITY, Sept. 27, 2017 (GLOBE NEWSWIRE) -- tZERO, a subsidiary of Overstock.com, Inc. (NASDAQ:OSTK),  RenGen LLC and the Argon Group today announced an exclusive joint venture that teams the market-leading strengths of each company to launch an Alternative Trading System (ATS) that will transform the trading of security tokens issued in Initial Coin Offerings (ICO) in compliance with SEC and FINRA regulations (Joint Venture). This rapidly emerging asset class of blockchain-based digital tokens has raised more than $2 billion so far this year (per Coindesk.com’s ico-tracker) and cryptocurrencies overall (including digital tokens) have a current market cap of $137 billion (per Coinmarketcap.com), making this a huge growth industry. Digital tokens and cryptocurrencies are also changing the face of emerging growth company financing. In the first half of this year, more money was invested in fintech through cryptocurrencies than through venture capital (over $1.2 billion, per CNBC).

“With ICO blockchain offerings surpassing traditional early stage VC funding and U.S. regulators seeking legitimate venues to support security token offerings, with this JV tZERO continues to maintain its leading edge in blockchain financial technology,” said Patrick M. Byrne, CEO of Overstock. “tZERO has been at the forefront of the blockchain revolution for years, working closely with regulators since 2015 – launching the world’s first SEC compliant ATS for blockchain assets, the first private blockchain bond offering, and the first ever public issuance of a blockchain security,” continued Dr. Byrne.

“Now, by combining our expertise with Argon's advisory services and RenGen's electronic trading, deep liquidity and market making capabilities, we are in a position to launch the only U.S. SEC compliant token trading venue,” concluded Dr. Byrne.

The landmark Joint Venture aims to redefine the way the ICO market looks at security tokens, and enhance liquidity to accelerate market development. Lack of liquidity has been a significant impediment to security token market development. This topic has received much attention since the issuance of the SEC Report on the DAO Release No. 81207 / July 25, 2017, where the SEC made clear that any digital token with an income stream is a security, and furthermore that security tokens may only be traded on an ATS or a National Securities Exchange.

“We have long been advocating that issuing digital tokens as securities gives issuers and purchasers the greatest certainty about the legal regime that applies to the sale and the widest range of options to provide an attractive return for investors,” said Emma Channing, CEO and General Counsel of the Argon Group. “The key issue to date has been the need for an appropriate marketplace to provide liquidity. This joint venture between tZERO, RenGen and Argon has the potential to completely change the face of ICOs.”

The Joint Venture will be built in an exclusive collaboration that draws on the distinct strengths of each company, combining tZERO’s groundbreaking, blockchain-based trading platform with RenGen’s ability to provide liquidity, market making and algorithm technology, and the Argon Group’s premier ICO advisory experience and security token clients. The Joint Venture will also take advantage of SaftLaunch for AML and KYC capabilities.

“This Joint Venture allows us to continue achieving our goal of leveraging our existing U.S. equity market infrastructure and smart order routing technologies within the blockchain space,” said Joe Cammarata, President of tZERO. 

“I have long believed that securitization is one of the best use cases for blockchain technology – and the transformative ICO market has proven so,” said Suleyman Duyar, Managing Partner, RenGen LLC. “Patrick Byrne and tZERO had great foresight in developing and registering the first digital ATS, and now, in partnership with Argon, an industry-leading ICO consultancy, we are excited to bring our high-volume participation in cryptocurrencies, technology and trading expertise to this promising venture. It is a very exciting time to be an investor in ICOs.”


Stoel Rives Innovation Awards: Celebrating Utah’s inventive companies and technologies

tZERO's Blockchain-Based Securities Trading Platform by Medici Ventures: "Deep in the details of how Wall Street trades are managed is a loophole that allows a seller to get the funds for selling stocks without having to produce a certificate of sale for a few days, meaning an unscrupulous trader could sell stocks without actually owning or borrowing them."

Read the full article here.

Overstock Just Closed its First Day of Blockchain Stock Trading

This story originally appeared on CoinDesk.com here.

(@DelRayMan) | Published on December 16, 2016 at 22:48 GMT

The first-ever day of stock trading on a blockchain-based, shared ledger has come to a close.

After six-and-a-half hours of being open for business, Overstock.com’s t0 blockchain platform has very little to show in terms of trade activity. In fact, there was almost no activity at all.

But that’s not the point, according to Patrick Byrne, Overstock’s founder and CEO, who has been waging a personal fight against some of Wall Street’s more opaque business practices. In conversation with CoinDesk, Byrne likened the day of trading to test pilot Chuck Yeager breaking the sound-barrier for the first time — but for only a few seconds.

While activity on the t0 blockchain explorer was confined to the verification of two blockchain addresses, the fact that there’s a public record at all is what Byrne says is the most important detail.

In the market ecosystem Byrne imagines, it is exactly this record that will prevent a wide range of profit generation employed by the middlemen responsible for connecting buyers and sellers and helping them settle their transactions.

Byrne explained:

"There’s a new age coming to humanity riding the blockchain. Over the next decade, what the Internet did to communications, blockchain is going to do to about 150 industries, and capital markets is just one of them."

Slow start

The reason for the slow start might not be because of lack of interest.

Yesterday, Overstock announced it had raised $10.9m in an unusual offering comprised of $1.9m worth of stock traded via digital assets on the t0 platform. Fifty-five people purchased a total of 126,565 shares for $15.68.

And it's not just investors who stand to benefit from increased transparency.

Byrne cites the recent "IPO drought" as evidence that entrepreneurs are increasingly reluctant to list their shares on public stock exchanges from fear the value might be unfairly driven down by price manipulation.

"It’s like being dropped in a shark tank," said Byrne. "The people who’ve been up to mischief have the most to lose because they can’t do it with a blockchain-based capital market."

Blockchain obstacles

While multiple parties have posted sell offers, the difficulty that inhibits new people from creating and capitalizing accounts has prevented purchases from being made, according to Byrne.

Overstock’s broker-dealer Keystone Capital yesterday released instructions to investors looking to participate in the offering, including details on how to create an account and add funds.

While Byrne said he would have preferred to let investors know sooner, Keystone Capital CEO Steven Capozza described the onboarding process as "extremely smooth and orderly."

"We continue to open new accounts and there appears to be a good amount of interest," Capozza told CoinDesk. "The shares from the rights offering have been credited to the accounts and new accounts are being opened and funded for secondary trading."

Byrne expects that as these accounts are activated, the trading session set to begin at 9:30am ET on Monday will be more active than today.

A bold proposal

Johnathan Johnson, the president of Overstock subsidiary Medici (which developed the t0 platform) told CoinDesk he expects additional firms to list over time.

The result, he said, would be a small but growing ecosystem of stocks that are easy for regulators to audit.

Yet as far as introducing radical transparency to the stock trading ecosystem is concerned, Byrne has another strategy up his sleeve.

Last month, the US Securities and Exchange Commission (SEC), which regulates post-trade in the US, approved a plan to create a "consolidated audit trail", a plan the regulator estimates will cost $3.4bn to implement and an additional $1.7bn per year to run.

As the federal regulatory body is taking these steps to force shady trades into the light, Byrne told CoinDesk that he’ll build them a blockchain-based audit trail at no cost instead.

Byrne noted:

"The SEC has half a billion dollars to create a consolidated audit train and it falls out of our office for free. We’ll give it to them for free if they use our system."

t0 platform successfully employed in the world’s first public issuance of a blockchain equity

SALT LAKE CITY, Dec. 22, 2016 -- Financial technology company t0.com, Inc. announced the successful implementation and production level use of its distributed ledger technology-based platform in the issuance of a registered security. The shares, issued by Overstock.com, Inc. (NASDAQ:OSTK), are the first in history able to trade on an alternative trading system (ATS) utilizing distributed ledger technology.

Equity transactions generally settle three days after trade date, or T+3. By contrast, trades executed through the t0 (t-zero) platform, settle on trade date, or T+0, a fact that gives rise to t0’s name. Same day settlement has long been the aim of both investors and securities exchanges.

“The efficiencies that blockchain technology introduces to securities trading and settlement are so significant, it makes their eventual broad-based adoption inevitable,” said t0 President and securities trading expert Joe Cammarata. “It’s exciting to be on the leading edge of this wave of fintech innovation. We look forward to applying our technology to a very broad range of asset classes and stages in the trade lifecycle.”

t0 software leverages the security, transparency and immutability of cryptographically protected, distributed ledgers to transfer the digital representation of cash and digitized assets between accounts with unprecedented speed. This greatly decreases transaction friction and the need for many incumbent intermediaries while eliminating counterparty risk.

“t0’s platform not only utilizes and builds upon the well-known strengths of distributed ledger technology, but is designed to be compatible with financial institutions’ back office processes,” said t0 Chief Operating Officer Raj Karkara. “We believe that this combination of technologies will be invaluable in reducing time to market for a wide range of asset classes and in simplifying the ever-growing challenge of maintaining strict regulatory compliance.”

Having achieved what Overstock.com founder and CEO Patrick Byrne has termed the “Chuck Yeager Moment,” in which a formidable barrier is proven to be breakable, t0 will now build upon and expand its suite of offerings to include solutions for streamlining back office operation, securities lending and exchange of other asset classes such as ETFs, mutual funds and pre-IPO company shares.

About t0
t0.com, Inc. (pronounced tee-zero) is a majority owned subsidiary of Overstock.com, focusing on the development and commercialization of financial technology (FinTech) based on cryptographically-secured, decentralized ledgers – more commonly known as blockchain technologies. Since its inception, t0 has pioneered the effort to bring greater efficiency and transparency to capital markets through the integration of blockchain technology. More information is available at t0.com.

About Overstock.com
Overstock.com, Inc. (NASDAQ:OSTK) is an online retailer based in Salt Lake City, Utah that sells a broad range of products at low prices, including furniture, rugs, bedding, electronics, clothing, and jewelry. Additional stores within Overstock include Worldstock.com, dedicated to selling artisan-crafted products to help developing nations around the world and Main Street Revolution, supporting small-scale entrepreneurs in the U.S. by providing them with a national customer base. Other community-focused initiatives include Farmers Market and pet adoptions.  Forbes ranked Overstock in its list of the Top 100 Most Trustworthy Companies in 2014. Overstock sells internationally under the name O.co and regularly posts information about the company and other related matters under Investor Relations on its website.

SOURCE t0.com, Inc.

Media Contact:
Judd Bagley, t0.com, Inc.
(801) 947-5352

Overstock Begins Trading Its Shares Via the Bitcoin Blockchain

This story originally appeared on Wired.com here.

Online retailer Overstock.com has become the first publicly traded company to issue stock over the internet, distributing more than 126,000 company shares via technology based on the bitcoin blockchain.

Through a subsidiary called , the Salt Lake City-based Overstock has spent the past two years building the technology that facilitates this new way of trading financial securities. The online retailer and its free-thinking CEO, Patrick Byrne, view the blockchain as a way of significantly streamlining not only stock exchanges like the NASDAQ, but all sorts of other capital markets.

The blockchain is an online ledger controlled not by any one company or government agency, but by a global network of computers. With bitcoin, this ledger tracks the exchange of money, but it can also track anything else that holds value, including stocks, bonds, and other financial securities. The idea is that this technology can more accurately and inexpensively oversee financial trades while eliminating many of the middlemen and loopholes that characterize today’s markets.

Byrne calls today’s stock offering a “Sputnik moment.” In other words, it’s a first, but it’s largely symbolic. “It’s not a big Titan rocket. It’s not a moonshot,” he says. “But it demonstrates that we’re live.” He hopes to license tØ’s technology to outside organizations, including not just businesses like Overstock, but stock exchanges, banks, and other financial institutions.

Ironically, for legal reasons, today’s offering required the participation of about as many middlemen as the blockchain is meant to replace. Even as it offered its internet-only stock, the company also distributed a new batch of shares for trading on the conventional over-the-counter market. And to satisfy regulators, the company drove the blockchain shares through a broker and various other middleman that typically accompany a stock offering—yet another sign that this young technology is still a long way from overhauling Wall Street.

Today’s stock offering is a ‘Sputnik moment’: it’s a first, but it’s largely symbolic.

That said, Wall Street has certainly taken notice of technologies designed to reinvent the capital markets via the blockchain. Last December, big-name banks JP Morgan, Wells Fargo, and State Street got behind an open source project called Hyperledger. Many others have joined a blockchain-focused consortium called R3. The company behind the NASDAQ, meanwhile, has explored blockchain technology as a way of tracking the exchange of shares in private companies. But for now, it’s still unclear what technologies the big players will use or how they’ll use them.

And the momentum isn’t all in the same direction: Goldman Sachs and three other big-name players recently pulled out of R3. The move towards the blockchain has slowed after an initial frenzy, which was driven largely by a fear of “disruption,” says Rick Stinchfield, head of technology at Finadium, the financial consulting firm that closely follows the progress of blockchain technology on Wall Street. The big banks, it seems, have realized this disruption isn’t happening anytime soon. “Things have slowed down, gotten more methodical,” he says. “Bankers and brokers are in the risk business, but one of the things they don’t like is technology risk.”

A New Exchange

Byrne first revealed Overstock’s new blockchain stock offering in October at a fintech conference in Las Vegas, and over the past month, any existing Overstock shareholder could subscribe to take part. Today, the company actually moved the stock into investor accounts, including 126,565 shares traveling via tØ’s blockchain technology. Investors can begin trading the shares via the blockchain tomorrow. The Securities and Exchange Commission officially green-lit the operation last December, and Byrne says his company spent $5 to $6 million in legal fees securing regulatory approval from both the SEC and FINRA, the financial industry’s private overseer.

tØ runs its own private blockchain, which would seem to defeat the purpose of the technology. The power of the blockchain lies in its distributed nature—as a technology that no one entity controls. But tØ publishes all transactions to the blockchain proper—the ledger that underpins bitcoin—which provides a very public record of anything that happens on its private system. Part of Byrne’s aim is to offer a transparency that today’s markets don’t provide.

Byrne says Overstock and tØ are in discussions with multiple foreign governments about launching exchanges on the technology. But Stinchfield and others warn that this sort of tech can’t keep up with the rapid-fire nature of the modern markets here in the US. “I can’t imagine the Nasdaq on a blockchain,” he says. “The technology is not up to snuff. And it’s unlikely regulators will get comfortable with this.”

In the near term, such tech is more likely to reinvent relatively obscure pieces of the capital markets like the stock settlement system or the stock loan market. On Wall Street, it still takes up to three days to settle a stock trade—to actually move the shares between two parties. Blockchain tech can take this from three days down (T-3) to zero (T-0). Hence the name of Byrne’s company). Separately, the stock loan market is driven by a wide-range of well-paid middlemen that the blockchain could potentially eliminate from the equation.

Ultimately, three main players drive today’s financial markets: the stock exchanges, the brokers, and the central security depositories that oversee settlement. Byrne believes that if any one of these embraces the blockchain, the other two will go extinct, significantly reducing the cost of trading securities. “It’s a like a Games of Thrones,” he says.

No one is likely to win that game anytime soon. But Stinchfield agrees the blockchain could eventually streamline the system. “The blockchain could essentially combine the stock exchange and the central securities depository,” he says. “Trade and settlement become one.” The internet isn’t about to supplant Wall Street just yet. But the incentives are there to make 21st century stock trading look very different than it ever has before.

By Cade Metz