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GSR Capital to Invest in tZERO at $1.5 Billion Valuation

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  • Up to $270 million in tZERO equity (at $1.5 billion post-money valuation)
  • $30 million purchase of tZERO Security Tokens from Overstock.com
  • Up to $104.55 million in shares of parent company Overstock.com common stock

SALT LAKE CITY, Aug. 09, 2018 (GLOBE NEWSWIRE) — Overstock.com, Inc. (NASDAQ:OSTK) and t0.com, Inc. (“tZERO”), announce that the companies have both signed term sheets with GSR Capital, a Hong Kong based private equity firm, to invest up to $374.55 million in exchange for common equity in blockchain subsidiary tZERO and common equity in Overstock.com. Overstock and GSR Capital have also entered into a purchase agreement pursuant to which GSR Capital will purchase $30 million in tZERO Security Tokens from Overstock.

As part of the term sheet agreement, GSR Capital will purchase up to 3.1 million shares of OSTK common stock at a five percent discount to the closing share price on August 1, 2018. GSR Capital will also invest up to $270 million for up to 18% of tZERO’s equity at a valuation of $1.5 billion (post-money). Additionally, pursuant to a purchase agreement, GSR Capital will purchase from Overstock $30 million in tZERO Security Tokens. These tZERO Security Tokens were purchased by Overstock during the recently-closed tZERO Security Token Offering in a non-cash transaction in which Overstock forgave $30 million in tZERO intra-company debt. GSR’s Security Token purchase agreement replaces the GSR letter of intent previously announced on June 29, 2018.

The equity transactions are subject to definitive documentation and other customary closing conditions. They also provide GSR Capital with certain rights to allocate a portion of the investments to third-party designees.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi. “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 globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

“GSR Capital has the prescience to understand the disruptive power of blockchain capital markets,” said Patrick M. Byrne, founder and Chairman of tZERO, and founder and CEO of parent company Overstock.com. “They are aligned with our vision for the future of capital markets built upon the speed, trust, and security of the blockchain. And most importantly, they think big, and want to help us scale this vision globally as quickly as possible.”

“GSR Capital is very excited to partner with tZERO in its effort to expand the global footprint for blockchain-enabled asset trading including stocks, bonds, commodities, etc. We have a long-term view on how we want to scale this platform on a global basis,” said GSR Capital’s Chairman and founder, Sonny Wu.

About Overstock.com

Overstock.com, IncCommon Shares (NASDAQ:OSTK) / Series A Preferred (Medici Ventures’ tZERO platform: OSTKP) / Series B Preferred (OTCQX:OSTBP) is an online retailer based in Salt Lake City, Utah that sells a broad range of products at low prices, including furnituredécorrugsbedding, and home improvement. In addition to home goods, Overstock.com offers a variety of products including jewelry, electronics, apparel, and more, as well as a marketplace providing customers access to hundreds of thousands of products from third-party sellers. Additional stores include Pet Adoptions and Worldstock.com dedicated to selling artisan-crafted products from around the world. Forbes ranked Overstock in its list of the Top 100 Most Trustworthy Companies in 2014. Overstock regularly posts information about the company and other related matters under Investor Relations on its website, http://www.overstock.com.

About tZERO

t0.com, Inc. (“tZERO”) 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, tZERO has pioneered the effort to bring greater efficiency and transparency to capital markets through the integration of blockchain technology.

About GSR Capital

GSR was founded in 2004 by Sonny Wu and Richard Lim. Today, “GSR Ventures”, “GSR United Capital” and “GSR Capital” are three independent yet complementary teams set up by the partners in 2016 with the aim of sector leadership and going global with unique investment strategies and resources. GSR Capital has offices in Beijing, Hong Kong and the USA.

O, Overstock.com, O.com, Club O, Main Street Revolution, and Worldstock are registered trademarks of Overstock.com, Inc. O.biz and Space Shift are also trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include all statements other than statements of historical fact. Additional information regarding factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in the Company’s Form 10-Q for the quarter ended March 31, 2018, which was filed with the SEC on May 8, 2018, and any subsequent filings with the SEC.

Media Contact:

pr@overstock.com

Investor Contact:

ir@overstock.com

SOURCE: Overstock.com, Inc.

GSR Capital to Invest in tZERO at $1.5 Billion Valuation

Source: Overstock.com, Inc.

Referenced Stocks: OSTBPOSTK

Security Tokens

Vertalo Receives TA License Approval

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SEC Approves Vertalo TA License

This month, the tokenization sector just got a bit more competitive as Vertalo announced the firm received its TA (transfer agent) license from the SEC. The important accomplishment places Vertalo in an exclusive class of SEC approved platforms currently in operation. Now the platform is ready to expand its functionality and expand its reach into the tokenization sector.

Vertalo

The Vertalo tokenization platform functions as an all-inclusive security token ecosystem. The platform connects issuers and investors directly to secondary trading markets. This strategy provides much-needed liquidity to the market. Uniquely, Vertalo is the only digital asset platform to offer its services to analog clients directly. Consequently, the platform could push security adoption further.

Vertalo’s streamlined design is meant to improve on the UX. The firm’s advantageous strategy tackles many of the most common barriers to adoption. For example, users don’t need any prior crypto experience to utilize the platform. Through advanced automation, users can skip over wallet setups. In fact, you don’t need any understanding of cryptocurrencies at all to use this platform successfully.

Tokenize it All

Vertalo allows anyone to take advantage of the benefits blockchain technology provides. Companies can tokenize their existing shares in real-time and without any technical know-how. Interestingly, the platform utilizes two of the most popular blockchains in the world to accomplish these tasks.

Vertalo CEO Dave Hendricks

Vertalo CEO Dave Hendricks

Ethereum or Tezos

Another unique feature of the Vertalo ecosystem is the fact that issuers can choose what blockchain to tokenize on. The platform utilizes both Ethereum and Tezos for these tasks. In fact, you can even convert your STO between chains with ease.

Vertalo – Experience Matters

When it comes to matters of compliance, you would be hard-pressed to find a co-founder with more experience than former SEC Attorney, Gautam Gujral. In the past, Gujral authored the SEC’s definitive paper released earlier this year. Consequently, Vertalo is fully compliant including the most recent joint statement released by the SEC and FINRA on July 8, 2019

High Standards – Vertalo

Speaking on the importance of his firm receiving its TA license, Co-Founder Dave Hendricks stated “The Transfer Agent plays a critical role in the lifecycle management of securities.  While regulators continue to come to terms with the rise of digital assets, they have not lowered their standards and expect digital asset platforms and their partners to hew closely to long-established norms. ”

Full Compliance – Vertalo

Hendricks explained “Vertalo enables its clients and partners to maintain full compliance with existing securities regulations, even while using newer instruments such as security tokens.  As we onboard more analog and legacy assets onto the Vertalo platform, our transfer agent capabilities will be able to address any compliance and securities handling requirements they may have.”

Vertalo’s Data Management Platform – TREATS

Another noteworthy project in the company’s pipeline has to do with the tokenization of private REITs (real estate investment trusts). Tokenized REITS provide more liquidity to the market. Additionally, these financial instruments are now usable as collateral. Comparingly, the traditional business systems employed in the REIT markets are paper-based offerings.

In order to make this monumental task a reality, Vertalo partnered with Prime Trust to build the TREATs platform. The goal of the strategic partnership is to combine Vertalo’s compliant digital asset management platform with Prime Trust’s market-leading custodial services.

In this manner, TREATs could play a major role in the market moving forward. Currently, the firm has billions of dollars of real estate under management. Importantly, the company announced that it is already working with dozens of REITs currently.

A Better Tokenization Experience

The developers behind the Vertalo platform have the experience and network to make their strategy work. You should expect to see major moves come from this camp over the coming months as the company’s strategies unfold. For now, the tokenization sector just got a new player worth watching.

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Regulation

Shopin Faces Multiple Fines from the SEC

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Shopin Faces Multiple Fines from the SEC

Charges Laid

As of December 11th, the Securities and Exchange Commission (SEC) has officially charged another ICO and its organizer – Shopin, and it’s CEO/Founder Eran Eyal.

Not only does the SEC allege that Shopin hosted an unregistered securities offering in the form of the ICO, but that the founder used more than half a million dollars of the funds raised for his personal expenses.

ICO Details

The ICO in question was, at the time, a successful endeavour for Shopin.  While performed in violation of multiple laws, the company managed to raise over $42 million.

Those that took part in the ICO were informed by Shopin that a platform, aimed towards revolutionizing online shopping through the use of blockchain technology, would be built.  This was found to be a lie –to date there has been no platform developed.

To create trust among ICO participants, the company also indicated that they maintained various relationships with established companies.  This was also found to be a lie.

Similar Events

After a long period of inactivity, the SEC has used 2019 as a launching platform for their assault on improperly/fraudulently run ICOs.  Shopin is simply the latest entity to have found themselves as the subject of the SEC’s attention.  The following articles are just a few of those that have found themselves on the receiving end of similar fines, over the past year.

Veritaseum Hit with $8 Million in SEC Fines

SEC Lays Multiple Charges against EtherDelta Founder

SEC Zeroes in on ICOBox Activity, Filing Multiple Charges

All for Show?

While the exodus of bad actors within the world of blockchain is definitely a positive thing, are fines being levied by the SEC actually effective?

It was recently reported how Gladius, a company which saw themselves in the crosshairs of the SEC, failed to pay nearly $13 million in fines.  Time will tell if the various companies, which also find themselves in similar situations, actually pay up, or claim broke.

Gladius Fails to Pay SEC Fines

Reiterating Stance

While not addressing the situation involving Shopin directly, SEC Chairman, Jay Clayton, recently reiterated his stance towards the blockchain community.

“This past year, the Commission has brought actions against a number of issuers of digital assets for allegedly engaging in fraud and for violating the registration provisions of the federal securities laws,” he said. “The Commission also filed charges related to the unlawful promotion of initial coin offerings (ICOs) and the unlawful operation of a digital asset trading platform.”

He continued,

“Overall, I believe we have taken a measured, yet proactive regulatory approach that both fosters innovation and capital formation while protecting our investors and our markets.”

Commentary

As is often the case, a representative elaborated, in their announcement, on the decision to charge Shopin.  Marc P. Berger, Director of the SEC’s New York Regional Office, had the following to say on the matter.

“As alleged in today’s action, the SEC seeks to hold Eyal and Shopin responsible for scamming innocent investors with false claims about relationships and contracts they had secured in support of a blockchain-based universal shopper profile…Retail investors considering an investment in a digital asset that meets the definition of a security must be afforded the same truthful disclosures as in any traditional securities offering.”

Shopin

Founded in 2017, Shopin maintains headquarters in New York.  The company set out with the intent to evolve e-commerce through an influx of blockchain technology.

CEO, Eran Eyal, currently oversees company operations.

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Interviews

Oliver Siah, CEO of Fraxtor Capital – Interview Series

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Oliver Siah, CEO of Fraxtor Capital - Interview Series

You have an interesting and diverse life story, having spent 17 years in the civil service as a Republic of Singapore Air Force Officer, and Pilot. How did you transition from such a career to launching your first real estate investment company Hanson Court Pte Ltd?

I had two passions growing up. One was Aviation, and the other was Real Estate Investment. I enlisted as a pilot in the Air Force when I was 19 years old and was offered a government scholarship to further my studies in Australia. At 21 years old, I bought my first commercial real estate, which was a retail unit in a shopping mall in Singapore. By the time I graduated at 23 years old, I had sold the retail unit for about double the purchase price, netting me more than 10x return on equity. I was so intrigued by this that I could not wait to buy my next property, this time, a residential unit in Singapore. I sold this unit six years later for more than double the purchase price as well.

I knew I was on to something. So I set up my family investment vehicle Hanson Court Pte Ltd (named after the first property we acquired) after completing my Pilot training in the Air Force in 2009 (during the financial crisis). We went on to buy ten commercial and industrial units in Singapore, with a strategy to add value to the assets through asset enhancement. By doing so, we managed to push the rental income up substantially and sold the units five years later, achieving more than 40% IRR (p.a.).

After serving for 17 years, in 2018, I left the Air Force to focus on my startup Fraxtor.

 

In order to familiarize our readers better, could you share with us what Hanson Court Pte Ltd does?

Hanson Court Pte Ltd was formed as a property investment company in Singapore. During the financial crisis in 08/09, we acquired many commercial and industrial assets for below valuation and held on to them until the market recovered, earning us more than 40% IRR. At the moment we are still invested in commercial units in Singapore and have also ventured abroad to China to develop properties.

 

Was there something that your saw or experienced operating Hanson Court that inspired you to launch Fraxtor, a company that specializes in offering tokenized and crowdfunded real estate?

Through my experience investing in property, I realised that some pain points could be addressed through tokenisation. First, it was the large capital outlay that is required to purchase a property which makes it difficult for investors to diversify their portfolio.  Second, it was the lack of liquidity of the investment, which makes it prohibitive for people who want to invest in the short term. Third, it was gaining access to the global real estate market. The know-how required to conduct the due diligence on the property and even to structure the investment makes it difficult for individuals to invest overseas.

With a platform like Fraxtor, we can allow investors to co-invest with us from as low as $10,000 and enjoy a hassle-free investment experience.

 

Could you elaborate on how Fraxtor sources which property to invest in?

We currently focus on opportunistic and value-add projects in matured markets like Australia, Japan, Singapore and Europe (including the UK). These are markets that our team is more experienced as well.

First, we look at two key factors: location and potential. Location is something we cannot change. Hence it is essential to select projects based on the accessibility and desirability of the asset’s location. Potential is what we can unlock in the property through redevelopment or asset enhancement initiatives. This we feel would be the allow us to increase the value of the property.

Next, we look at the financial structuring of the asset. We look at the best way to structure the capital stack of the investment to maximise the return for the investor. In the current market situation, we are looking at 10+% IRR for value-add projects and 15+% IRR for opportunistic projects.

Projects that meet our criteria would be presented to our investment committee for selection.

 

How long are the properties held? Is the goal to tenant them, or to flip them for capital gains?

The duration of the holding period depends on the type of property and the strategy we adopt. For our development projects, we aim to sell the assets as soon as possible to unlock the return for our investors. This would probably take between 1.5 to 3 years. For our investment projects, the goal is to add value to the assets through enhancement initiatives, increase the net operating income and subsequently sell them for capital gains. This would take between 3 to 5 years.

 

Are monthly or quarterly updates issued to investors? What type of information can they access?

Investors are updated as and when there are updates on the property. Investors are able to access the information memorandum for the property as well as the financial feasibility study that we had done for the project.

 

Where is Fraxtor regulated and what licenses does it have?

Fraxtor is currently exempted from licensing in Singapore as we only deal with accredited investors.

 

Could you tell us about some of the current investments that you offer, such as the location and property type?

Our current project is to redevelop a residential landed property in Singapore. The property is situated in Adelphi Park Estate along Upper Thomson Road. We plan to demolish the existing property and build two semi-detached units on the land.

 

Is there anything else that you would like to share with our readers?

Fraxtor will be expanding our operations in Australia soon and we are in the process of obtaining an Australian Financial Services Licence.

To learn more visit Fraxtor Capital.

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