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tZERO Issues Preferred tZERO Security Tokens

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NEW YORK, Oct. 16, 2018 (GLOBE NEWSWIRE) — tZERO, the global leader in blockchain innovation for capital markets, today announced it has completed the issuance of preferred tZERO security tokens. Tokens were issued to investors who had fully funded signed agreements for future equity (SAFEs) prior to the August 6, 2018 close of the company’s Security Token Offering (STO). tZERO raised $134 million from over 1,000 global investors during its STO.

“This is one of the first Security Token Offerings on a decentralized public network, and was conducted in full compliance with the U.S. securities laws,” said tZERO CEO Saum Noursalehi. “This is an exciting milestone for tZERO, and we are even more enthusiastic about the opportunities this will create for private and public companies wishing to raise capital through security token offerings, and for investors who wish to trade those securities.”

tZERO deployed its token contract, minted its security tokens, and issued into a tZERO custodial wallet on behalf of investors on October 12, 2018. To ensure compliance with federal securities law and regulations, and in accordance with the terms of the tokens themselves, the tokens will be locked up in the custodial wallet until January 10, 2019 (90 days after issuance). After the 90-day period expires, tZERO intends on offering holders the opportunity to trade tokens, pursuant to private resale transactions, with other accredited investors on a platform that tZERO is in the process of developing with a broker-dealer partner. In addition, tZERO intends that new investors who are accredited will also be able to open an account to buy tokens following the 90-day period.

“The issuance of the world’s first public cryptosecurity, OSTKP, in 2016 was tZERO’s Chuck Yeager moment: we broke the speed of sound by introducing the concept of real-time trade settlement. Today marks our Yuri Gagarin moment, where we leave behind the confines of the known world of traditional capital markets and take the first steps towards a new market powered by blockchain,” said Patrick M. Byrne, tZERO executive chairman and the CEO and founder of Overstock.com(NASDAQ:OSTK). “My humblest thanks to all the colleagues and investors that have shared our belief in a system of securities trading based on trust, transparency, and integrity through cryptography-based technologies, rather than one that relies on the mercy of middlemen who may not have the investors’ best interest at heart (and who may even, at times, be bent on mischief).”

tZERO also plans to designate an approved trading platform by August 6, 2019, one year after consummation of the STO, so holders may then resell their tokens to non-accredited investors. tZERO also plans to register the securities to enable secondary trading in more robust trading environments, such as the domestic (USA) exchange it is building in partnership with BOX Digital Markets, as well as international securities exchanges.

tZERO was founded in 2014 with the goal of utilizing blockchain technology to revolutionize Wall Street so that financial processes could become less beholden to traditional institutional market structures and the mischief and financial instability they have been known, on occasion, to permit. tZERO is a portfolio company of Medici Ventures, Overstock.com’s blockchain subsidiary. For more information on tZERO, please visit: tZERO.com.

Media Contacts:

tZERO

Alexandra Sotiropoulos, +1-212-754-5615

asotiropoulos@intermarket.com

Overstock.com

Overstock Public Relations, +1-801-947-3564

pr@overstock.com

About tZERO

tZERO Group, 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 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.

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 June 30, 2018, which was filed with the SEC on August 9, 2018, and any subsequent filings with the SEC.

Security Token News

Security Token Issuers to Benefit from alliance of ‘Issuance’ and ‘VStock Transfer’

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Issuance partners with VStock Transfer

Just announced today, deal marketing platform, Issuance, has partnered with stock transfer agent, VStock Transfer. This alliance was formed as Issuance saw a need on behalf of security token issuers.  This was the ease of token registration and transfer.

As a result, partnering with a transfer agent such as VStock Transfer, allows companies having completed a digital security offering the ability to utilize services and experience based upon decades of experience in securities law.

These teams should be able to hit the ground running, as Issuance CEO, Darren Marble, has had previous experience working with VStock Transfer. Through their ability to provide experience, along with cost saving measures, it’s no wonder why Issuance has partnered with VStock Transfer.

Commentary

The CEOs of each company discussed the partnership at hand.

Yoel Goldfeder, CEO of VStock Transfer, stated, “As an SEC-compliant transfer agent who has had the pleasure of working with a range of companies from private to pre-IPO issuers to NYSE American, NASDAQ and OTC listed companies, it was a seamless pivot into digital securities…We look forward to working with Issuance, an industry pioneer who will help to fuel the capital raising component for our clients.”

Darren Marble, CEO of Issuance, stated, “As digital securities continue to merge with the capital market infrastructure, support from companies such as VStock Transfer are critical to remain compliant throughout the lifespan of a DSO…We are thrilled to add VStock Transfer to our growing network of strategic partners and provide valuable registry and transfer services for our clients and their shareholders.”

VStock Transfer

VStock Transfer is based out of Woodmere, New York, where they provide services as an SEC registered ‘stock transfer agent’. The company is spearheaded by CEO, Yoel Goldfeder – a seasoned attorney specializing in corporate and securities law.

For a deeper look at what services VStock Transfer is able to provide, make sure to visit their website HERE.

Issuance

Issuance was founded in 2018, and is based out of Los Angeles, California.  Above all, the main purpose of the company is to act as a bridging platform. For example, this means working to connect investors with appropriate digital securities issuers.

Make sure to check securities.io again for future news on Issuance, as they have indicated future plans to tokenize themselves.

Recent News

Issuance is rapidly developing into a well-rounded company.  For instance, this marks just one of various strategic partnerships announced in recent weeks.

Here is a look at a few of our other articles detailing those endeavours.

Issuance and Tokeny – Partnering with a Goal of Interconnectivity

‘PCG Holdings’ Shows Belief in Security Tokens with Investment in Issuance

Exclusive Interview with Issuance CEO – Darren Marble

Issuance partners with Prime Trust

Vertalo and Issuance join Forces

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Interviews

Interview Series – Dave Hendricks, CEO & cofounder of Vertalo

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Dave Hendricks is the CEO and cofounder of Vertalo which is a stakeholder Registry and Cap Table platform for SEC Compliant Security Token offerings. They connect broker-dealers, issuers, exchanges and ATS’s.

AT:  Could you share with us what Vertalo does?

DH: Vertalo seeks to help more issuers, tokenize more assets, at lower cost and lower risk.  And at less expense.  Vertalo’s core offering is a crypto cap table, in other words a ledger of token holders.  ICOs didn’t care about cap tables, but equity investors do.

Investors can be added to a Vertalo-built cap table before, during, or after a fundraise or ICO.  Vertalo’s wallet registration process is the connective process between issuers – who want to know who owns how much of their company – and investors, who want to know how much they own of the company.  Vertalo is glue for the overly confusing STO ecosystem.  Vertalo helps issuers manage their investor community and Vertalo helps investor manage their holdings – all via a simple graphical interface that is way better than etherscan.

 

AT:  Is this on a public or private blockchain? If both, could you elaborate what information is on the public versus the private?

DH: Most Security Token issuance development is Ethereum-based, and most smart contracts are written in Solidity, so Vertalo started its work in alignment with the community, but Vertalo was designed to be chain-agnostic.  If an issuer wants to write their token using Hyperledger, or Hashgraph, or NEO, or Stellar they can do that and Vertalo’s cap table and investor registration functions will operate the same way. We see benefits of permission-less and permissioned Blockchains for Security Tokens.

 

AT:  Do you perform the KYC/AML accreditation yourselves?

DH: Vertalo partners with major Accredited/Qualified and KYC/AML Services, since there are more than 200 different jurisdictions and we want to focus on what we do best.  We are developing a subscription service with several of these vendors to simplify secondary trading (where KYC-AML is so important).  More on that later in Q1.

 

AT:  Could you describe how the platform enables issuers to manage the investor community?

DH: Vertalo’s Cap Table combines the features of a traditional ledger with network connectivity.  The Vertalo cap table represents a relationship between two parties, determined by consensus.  Issuers use the vertalo registration smart contract process to invite and add an investor to the cap table.  That registration process creates a ledger which is more than a list of holders, it facilitates communications between the issuer and investor so that tokens, dividends, and documents can be transferred between the parties.

 

AT:  There are many non-blockchain options to manage a cap table. What are the benefits of using a blockchain, and more specifically Vertalo?

DH: Token trading is real-time.  If someone trades a security token, the investor ledger by law must be updated with the new address/holder of the token.  So a blockchain-based cap table ledger operates at the speed of blockchain, faster than paper and with better record-keeping.  Without a blockchain-based ledger for a blockchain based security, who would manage the legal requirements for maintaining a list of shareholders?  This was not a concern for ICO issuers, so they didnt create this tech.  ICOs just cared about exchanges.  STO issuers need to maintain compliance with securities law.

Developing blockchain-based cap tables is also the first and fundamental step towards greater liquidity for private assets, because cap tables are where the investor ownership rights are best enforced.  The reason that issuers and investors are tokenizing their offerings is to ultimately achieve greater liquidity by enabling their shareholders to sell on exchanges and ATSs subject to the issuers rules.

No traditional private equity cap table platforms connect to exchanges, and even obtaining a stock certificate from a traditional cap table platform is a days-long effort.  And when you receive a paper share from a traditional cap table platform there is no where to sell it, since you have to get permission from the board, and then there are few marketplaces for anything other than Uber or Lyft, etc..

Tokenized offerings are issued on the predication that the tokens/shares will be ‘tradeable/’ after a restriction is lifted.  By connecting the Vertalo blockchain-based cap table to exchanges and ATSs, we enable token holders to achieve the liquidity that is main differentiating feature of a security token offering, while complying with basic securities law.

 

AT:  How does the Vertalo registry reduce costs for Broker dealers?

DH: Broker-Dealers have fiduciary requirements to check KYC and AML.  Vertalo’s investor registry function, which connects KYC verified email addresses to blockchain wallets, was designed in conjunction with major broker dealers to help them comply with basic AML requirements.  Vertalo built its platform to be whitelabeled by broker-dealers so they don’t have to build or manage this process themselves.

 

AT:  You offer investors who register with Vertalo the opportunity to instantaneously share their investor profile with broker-dealers and issuers. How do investors sign up for this?

DH: This feature will be built out later this year.  Our focus is on the Picks and Shovels for our business clients.

 

AT:   One of the tools that you offer is the verification of wallet ownership? How is this performed?

DH: The Vertalo Wallet Registration process uses a smart contract to run a process that is similar to the method by which a bank verifies your ownership of an account, by depositing random amounts into an account. We send an email to the registered account holder, with a link to kick off a process. If you can log into that account and verify the amounts, that is the beginning of proven ownership.  It’s actually a little more complicated than that, but to the proper owner of a wallet, it is a very smooth process.  We use a special utility token (no, you can’t trade or transfer it) and smart contracts for this process.

 

AT:   Are there any notable projects that are currently using the Vertalo platform?

DH: We were our first client.  I think that Vertalo issued the third or fourth real, US compliant Security token in March 2018.  That is why we built this.  We are working with PrimeTrust, Issuance, Entoro, and we will be announcing some Major real estate, fund, and debt issuances that are launching in February and March. By the end of Q1 there should be more than 10 projects or Broker-Dealers using the tech to simplify their token issuances, investor relations and cap table management.

 

AT:   Is there anything else that you would like to share about Vertalo?

DH: Issuers should create a great product, find a great law firm, find a great broker-dealer and call Vertalo.  We can stitch all the parts together for you and also help you save a tremendous amount on your overall tokenization costs.

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Security Token News

Digital Securities Platform DX.Exchange, Survives First Week Scare

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Dx.Exchange has had quite the tumultuous week. As the exchange closes its first week of operation, the team behind the project was able to dodge a potentially damaging situation.

From hordes of investors signing up pre-launch, to potentially disastrous glitches, here is a brief look at the problems that plagued week 1.

Details of the Problem

Upon launch of the platform, an anonymous user took it upon themselves to evaluate DX.Exchange. Shockingly, the user found information leaks that could potentially be harmful to a variety of parties.

Information being leaked ranged from password reset links, to names, email addresses, and more. With this, if someone were so inclined, they would be able to create backdoor entrances to user’s accounts.

It isn’t hard to imagine what kind of havoc a malicious individual could wreak.

Problem Solved

In an attempt to allay investor’s fears, Dx.Exchange has reached out the public with the following statement.

“We would like to thank the vigilant reporter, and our supportive community, who together with, brought his issue to our attention. We are happy to report that the vulnerability has been successfully patched, and no user funds were compromised. Our launch was met with a stellar response from our community eager to trade cryptocurrencies and digital stocks. Customer funds were always safe, our multi layer advanced monitoring and defense mechanism was able to avoid any further issue.”

This statement came after the company scheduled platform maintenance within hours of the news breaking.

Caught out Attention

DX.Exchange originally caught our attention due to the manner in which they offer their services. Rather than hosting digital securities of companies that have decided to tokenize, DX.Exchange has taken a different approach.

They are purchasing traditional shares of publically traded companies, and then issuing their own security tokens to investors, representing ownership of the shares. Due to the method in which this transaction takes place, the shares are held by DX.Exchange. However, investors holding the associated security token receive the full range of benefits associated with them (dividends, equity etc.).

Examples of these companies notably include Apple, Tesla, Amazon, and others.

Skeptics Abound

The CEO of DX.Exchange has stated that due to their licencing and region of operation, the SEC has no means in which to stop them from offering these services.

However, there are many skeptics of the exchange that believe it will eventually face due recourse. Through what means is unclear, but there are certainly going to be companies that do not want their shares tokenized in such a fashion.

Dx.Exchange

DX.Exchange is based out of Estonia, and was founded in 2018. Above all, the company acts as an online exchange, providing investors access to a variety of digital assets.

Prior to the events discussed here today, we recently spoke about DX.Exchange and the companies recent launch. To learn more about DX.Exchange, make sure to read the article below.

DX.Exchange to Tokenize Publically traded Securities

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