Categories: Blockchain Investments
Topics: Bitcoin

tZERO: Revolutionizing Capital Markets with Blockchain-Powered Trading Platform

tZERO is a blockchain-powered trading platform for capital markets. 

Established in 2016 and headquartered in Midvale, UT, it operates as a majority-owned subsidiary of Overstock.com (NASDAQ: OSTK) through Medici Ventures, the company's blockchain venture fund. 

tZERO offers a range of products and services, including security tokens and a trading platform, blockchain brokerage services, tokenized securities lending, digital brokerage, and overnight alternative trading systems (ATS). 

It also offers digital brokerage services through Dinosaur Financial Group, LLC, and operates an alternative trading system (ATS) for selling digital tokens through another Overstock subsidiary, Pro Securities LLC. Moreover, tZERO has partnered with GSR Capital to develop a securitized token for trading cobalt.

One of the notable features of tZERO is its DLR technology (Digital Locate Receipt), which utilizes a proprietary blockchain to enhance transparency in short selling practices, particularly to address "naked" short selling.

They have also launched a mobile payment application for buying and selling cryptocurrencies like Bitcoin and Ether. The app was developed by a cryptocurrency startup called Bitsy and was made available on iOS and Android devices. Additionally, tZERO has announced a partnership with Vision Tree, a film production and financing company, to develop the "Bushnell token" for a movie about Nolan Bushnell, the founder of Atari.

tZERO conducted an initial coin offering (ICO) in 2017, later transforming into a security token offering (STO). The security tokens were minted and issued to investors in October 2018, with a lock-up period and subsequent release to investors in January 2019. Dinosaur Financial Group facilitated the transfer of tokens to investors' wallets or brokerage accounts.

On January 25, 2021, Overstock converted its ownership of Medici Ventures into a limited partnership with Pelion Venture Partners as the general partner. Medici Ventures and Overstock still maintain minority interests in tZERO.

In 2019, tZERO launched a conventional cryptocurrency exchange called "tZERO Crypto," which enabled users to buy, sell, and hold Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and other cryptocurrencies. However, the company confirmed in its February 3 announcement that it would be winding down the exchange on March 6.

In the announcement, tZERO suggested that unregulated crypto exchanges are becoming outdated, stating, "We believe that many digital assets would be treated as securities and trade in a regulated ecosystem." The company further elaborated:

"While the regulatory environment surrounding crypto assets is being clarified by the SEC and other regulators (especially in light of recent events), we will concentrate on our distinctive regulated securities business, which we anticipate will be the primary marketplace for digital asset securities."

The company explained that the March 6 shutdown date was selected to facilitate an organized withdrawal of assets by customers, which are currently held by the custodian. It did not specify whether the shutdown of tZERO Crypto would impact the trading of security tokens on the tZERO ATS stock exchange. 

Given the SEC’s increasingly hostile stance towards cryptocurrency exchanges, this was likely a necessary move in the short-term. 

However, tZERO is still well-positioned to benefit from the growing trend of tokenization of assets moving forward. 
 
Considering that Overstock has 55% ownership of tZERO and all its related assets (estimated at $1-2 billion) the stock looks increasingly attractive at its current price. 

Add their recent acquisition of Bed Bath and Beyond’s digital assets, and the future is looking bright.

Chris Curl
Editor, Daily Profit Cycle