GSR reduced investment
Overstock and their subsidiary, tZERO, broke the news today, that their long pending deal with GSR Capital has been downsized.
Some readers may recognize the name, GSR Capital, as they are also the ones that turned to tZERO for the tokenization of cobalt. Beyond this, the duo made waves over the past few months, as GSR was expected to make a $404 million investment in tZERO.
Unfortunately, this deal never materialized. While the announcement was made in mid-2018, the deal was supposed to occur in the fall. This was then delayed, as a third party was to come on-board. Fast-forward to today, and the deal has now been downsized, with an expected completion date of April 2019.
This downsizing will see the $404 million slashed down to $100 million. To ensure the eventual completion of the deal, each of the involved parties have signed a memorandum of understanding, outlining the deal.
GSR Capital will not solely provide the $100 million investment. The third party involved has now been identified as Makara Capital.
Makara Capital is an investment firm with pre-existing close ties to GSR Capital.
Why Go Through The Trouble?
Beyond the obvious appeal of the funds involved, there is more to this deal than simple financial allures. Each of these investment companies has sturdy footing within Asian markets. As tZERO continues its global expansion plans, strategic partnerships such as the one described here today will be key.
“The previously-announced GSR equity investment in Overstock and tZERO has not been completed. However, we remain in discussions with GSR Capital and Makara Capital, a key partner of GSR Capital, regarding a potential transaction. Both have recently signed an MOU with tZERO outlining a transaction in which Makara and GSR would co-lead an investment of up to $100 million in tZERO common stock and close the transaction 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.
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. I urge you to join us for that discussion of our business at a time and date to be announced soon.”
For those that may be surprised by the statement above: don’t be. When the first delay occurred in this investment, Patrick Byrne issued warnings to ‘not count your chickens before they hatch’.
At the time, he stated,
“Despite our concerns (which no doubt you share), we have decided to grant GSR the time requested to onboard this additional partner (who we think will in fact be a highly valuable participant in the ecosystem). Additionally, in a display of commitment to our partnership, GSR has signed a retainer agreement with tZERO to ensure the cobalt offering is not delayed by this extension on the GSR investment. While we are appreciative of GSR’s commitment and excited about the opportunity in cobalt offering, we do acknowledge to you our shareholders that one should not assume the arrival of GSR’s investment until it arrives.”
GSR Capital founder, Sonny Wu, created the company in 2004. Operations are currently based out of Hong Kong, China.
To date, GSR has shown great interest in the blockchain industry at large. Despite this hiccup, it is expected that they will remain active in blockchain investments.
As an independent company, Makara Capital was formed in 2008. Since then, this investment firm has gone on to see great success, with various global hubs.
Company headquarters are situated in Singapore, where Makara Capital is regulated by the Monetary Authority of Singapore.
A young company, tZERO is the brainchild of Patrick Byrne – founder of overstock.com. tZERO has caught the attention of many in the burgeoning digital securities sector. They have done so, to date, through impressive execution of their roadmap. The most recent large milestone was the launch of their digital securities trading platform.
In Other News
To learn more about the companies and deals discussed here today, check out a few of the articles below.
SIX Acquires Stake in daura – SDX Exchange
A Strategic Advantage – SDX Exchange
Boerse Stuttgart Subsidiaries to Benefit from Investment by SBI Holdings
It is fair to say that SBI Holdings has decided to go all-in on blockchain based endeavours as of late. This has been made evident through various high profile investments. The most recent of which include Ripple, Securitize, and now Boerse Stuttgart – the latter of which we will discuss here today.
In an effort to usher in higher levels of adoption surrounding digital securities, SBI Holdings has invested in multiple branches of the Boerse Stuttgart group.
- Boerse Suttgart Digital Exchange
- Boerse Stuttgart Digital Ventures
Plans Moving Forward
In their announcement, it is clear that the rationality behind this new partnership is geared around global expansion. With SBI Holdings operating within Japan, and the various branches of the Boerse Group operation throughout Europe, the pair should find the partnership mutually beneficial.
Beyond simple expansion, the pair of companies closed out their announcement by elaborating on their plans. They stated,
“The SBI Group and the Boerse Stuttgart Group are partners in the digital asset business in Asia, including Japan, as well as in Europe. We will work together to build a global digital asset finance ecosystem utilizing blockchain.”
Upon announcing these investments, representatives from each, SBI Holdings and Boerse Stuttgart, took the time to comment. The following is what each had to say on the matter.
Yoshitaka Kitao, CEO of SBI Holdings, states,
“Due to the decentralized nature of digital assets, it is our top priority to find globally suitable partners to build our digital asset ecosystem. The SBI Group, with its trading platform for digital assets and other relevant companies, will make full use of the cooperation with the Börse Stuttgart Group to respond to the global customer interest in digital assets.”
Alexander Höptner, Chairman of the Management Board of Boerse Stuttgart GmbH, states,
“Asia and Europe are currently the fastest growing markets for digital assets. With the SBI Group, we have found an ideal partner to realize our vision of an efficient, global ecosystem along the value chain of digital assets. In addition to the exchange of knowledge and technology, the collaboration also covers the issuance, listing and trading of digital assets across borders, as well as brokerage services and building the first global bridge for custody.”
The Boerse Stuttgart Group consists of various branches such as Boerse Stuttgart Digital Exchange, and Boerse Stuttgart Digital Ventures. These two branches, in particular, have a focus on blockchain based endeavours, including the eventual creation of a secondary marketplace for digital securities.
An acting subsidiary of SBI Group, SBI Holdings, was launched in 1999. The company maintains headquarters within Tokyo, Japan, where they seek out, and establish, strategic partnerships with high potential companies.
CEO, Yoshitaka Kitao, currently oversees company operations.
In Other News
In recent months, each of the companies discussed here today have found themselves in our news feed. Whether launching a digital exchange, or making strategic investments, both companies have been quite active. The following articles are just a couple discussing recent moves by both.
DX.Exchange Goes Bankrupt – CX Technologies Ltd
Additionally, a host of suppliers have taken suit against the company. These suits run the gambit from unpaid bills to the alleged fraud. The well-known cybersecurity firm, White Hat Ltd is one of the company’s claiming losses due to DX.Exchange actions. Another lawsuit lists Bee2See Dotan B.S. Solutions. This is the firm that handled DX.Exchange targeted marketing. Even the company supplying the servers never got paid – Malam Team.
Writing on the Wall – DX.Exchange
Employees and suppliers knew to take action earlier in the month after the firm closed its doors unexpectedly. At the time, DX.Exchange owner Pinhas Patarkazishvili cited the rising costs and dwindled profits the exchange had left. He told employees that he was searching for a merger or acquisition and if that he was unsuccessful, the company would permanently cease operations.