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Saum Noursalehi, CEO of tZERO – Interview Series

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Saum Noursalehi, CEO of tZERO - Interview Series

Saum Noursalehi is the CEO of tZERO, a security token exchange which has the potential to disrupt the entire digital securities space. Previous, to this position Saum was President of Overstock.

Before becoming CEO of tZERO, you were President of Overstock, a leader in ecommerce and one of the first Fortune 500 companies to accept Bitcoin. When did you first hear about Bitcoin, and what was your initial impression of this technology?

I first heard about Bitcoin in 2013 at a dinner party, and was fascinated by the technology. I did not actually invest in bitcoin until 2014 when I started to learn more about it, which was after Overstock signed a deal with Coinbase to accept it as a payment option.

 

Could you let us know how you transitioned from being President of Overstock, to CEO of tZERO?

I worked at Overstock for nearly 14 years, holding a number of leadership positions in a variety of functions at the company, including technology, product development, R&D and marketing to name a few. Having studied Computer Science in college, I have always had an interest in technology, particularly artificial intelligence and blockchain technology. When the opportunity arose to become the CEO of tZERO, I could not pass it up. My time at Overstock provided me with a strong understanding of product development, leadership and what it takes to run a business, which cultivated my professional identity as a product-focused leader. As a senior leader at a publicly-traded company, I had deep exposure to capital markets and opportunities for transforming the current ecosystem. I believe that this experience and my interest in innovative technology allowed me to transition the blockchain-based capital markets space without too much difficulty.

 

Patrick Byrne recently offered his resignation as the CEO of Overstock. How will this impact both tZERO and its parent company Medici Ventures?

As I said in my recent letter to investors, I was sad to see Patrick go. He is the founder of these organizations, however, his resignation has not impacted tZERO and Medici Ventures’ day-to-day operations or the execution of our roadmaps. Jonathan Johnson, who continues to be the Chairman of tZERO’s board and President of Medici Ventures, assumed the role of Interim CEO of Overstock. Jonathan is a great leader and a champion for blockchain and its potential as a contributor to evolution in a number of ecosystems, particularly its application to the capital markets through tZERO. Jonathan and the Overstock/Medici boards are committed to tZERO and our long-term success.

 

In July the OSTKO digital preferred dividend was announced. Can you explain the rationale behind this and how it will help to onboard new clients to tZERO?

In July, Overstock announced its intention to issue a dividend to its shareholders in the form of new shares of Digital Voting Series A-1 Preferred Stock, OSTKO. A number of OSTKO shares currently trade exclusively on the PRO Securities ATS, operated by a wholly-owned subsidiary of tZERO, and Overstock expects the new dividend shares to likewise trade on PRO Securities ATS. The dividend will be payable at a ratio of 1:10, meaning that one share of Series A-1 will be issued for every ten shares of common stock, Series A-1 or Voting Series B Preferred Stock held by all holders of such shares as of the record date.

This dividend has the potential to introduce tens of thousands of Overstock shareholders to the PRO Securities ATS. In addition, it has brought interest from many broker-dealers that would like to trade such securities, which in turn will introduce all of their clients to our platform. One of our key priorities is to introduce more investors to the platform, and this should serve as a catalyst for enhancing liquidity. The dividend is currently in the process of SEC registration and Overstock is working actively with the regulatory authorities.

 

Ravencoin was the third cryptocurrency added to the tZERO app. Why Ravencoin?

Ravencoin is one of the fastest growing cryptocurrencies. Additionally, Ravencoin is philosophically aligned with tZERO in making it easy to digitize assets and make them freely tradable. Ravencoin technology allows for straightforward issuance and on-chain transfer of any digital asset, including security tokens, making support for RVN cryptocurrency a natural fit for tZERO’s Crypto app.

 

Adding security tokens such as BCAP and SPiCE on tZERO would speed up adoption of the entire digital securities ecosystem. Is there an expected date for when more tokens will be added to tZERO?

PRO Securities is currently conducting due diligence on security tokens that utilize Securitize’s DS protocol, and we are excited about this potential to offer new assets, which will in turn attract new investors. We are aiming to have additional tokens trading by the end of the year.

 

You’re aiming to launch the first regulated National Security Token Exchange with Box Digital Markets sometime in 2020. Can you share with us some details regarding this partnership, and how it benefits tZERO?

We continue to work with our partners at BOX Digital Markets (BOX) on launching the first regulated national security token exchange through our joint venture, the Boston Security Token Exchange (BSTX), in 2020. With BOX’s experience in building and operating a sophisticated securities exchange and tZERO’s industry leading blockchain technology, we have brought together our organizations’ combined expertise to fundamentally improve the marketplace for digital securities. We continue to make progress and work together to establish a technical and regulatory structure that will be in place ahead of the launch of the exchange.

 

Where do you foresee digital securities being in five to ten years, and tZERO’s role in this?

Within five to ten years, I expect capital markets to evolve into a blockchain-based ecosystem where not only equities and fixed income on Wall Street will be tokenized, but also other non-traditional assets, such as real-estate, film, art, sports teams, athletes or anything of value. Blockchain technology has great potential to increase transparency, reduce friction costs, enhance regulatory compliance and reform the role of traditional market participants. The average retail investor will have access to the types of assets that were previously reserved for just the wealthy or connected. I see tZERO spearheading the effort of providing a platform for the next generation of asset trading.

 

Is there anything else that you would like to share about tZERO or Medici Ventures?

Medici Ventures is committed to advancing companies focused on blockchain technology, and tZERO is the crown jewel of Medici Ventures’s global keiretsu of companies. At tZERO, we continue to work toward our vision of creating a robust ecosystem powered by blockchain technology for investors to have venues to buy and sell digital assets (the PRO Securities ATS, tZERO’s Crypto App and, once established, BSTX), integrating the technology to tokenize assets (tZERO’s tokenization protocol technology) and establishing direct relationships with customers (subject to our wholly-owned subsidiary becoming approved as a retail broker-dealer).

Thank you for this great interview.

Anyone who wishes to learn more can visit tZERO or our tZERO business listing. You can also follow Saum Noursalehi on Twitter.

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Antoine Tardif is the CEO of BlockVentures.com, and has invested in over 50 blockchain projects. He is also the founder of Bitcoinlightning.com a news website focusing on the lightning network, and a founding partner of Securities.io

Exchanges

SIX Acquires Stake in daura – SDX Exchange

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SIX Acquires Share in Duara

In preparation for the launch of the highly-anticipated SDX exchange, SIX announced the successful acquisition of a stake in the duara platform. Daura is a token issuance and registry platform which has seen considerable success over the last year. Now, SIX and its team of collaborators seek to utilize duara’s proprietary software to further the SDX exchange’s capabilities.

A Strategic Advantage – SDX Exchange

As part of SIX’s SDX strategy, the firm partnered with Swisscom, Sygnum Bank, Custodigit and daura. The company intends to utilize the best protocols from each platform in the creation of the SDX exchange. Together, SIX’s team seeks to create a complete security token ecosystem. Here investors and businesses can plan, issue, trade, and manage their security tokens from one easy to understand interface.

Discussing the groups’ strategy, Johannes Höhener, daura chairman and Head of fintech at Swisscom spoke on the importance of the joint development work. Höhener pointed out the team’s other tasks. These tasks include helping to create a new standardizing for the tokenization of Swiss assets. She also touched on the company’s plans to expand into operating private blockchains as part of the overall strategy.

SDX Exchange Partnerships via Press Release

Additionally, Peter Schnürer, CEO of daura took a moment to speak on the benefits and security gained from both investors and companies. He explained some of these benefits including the increased transaction speeds. Typically, traditional securities can take days to settle. The SDX system will allow real-time trading and settlement. Impressively, the platform will be able to tokenize assets in just hours.

Players in the SDX Exchange Project

SIX managed to put together an experienced team of blockchain firms to bring the SDX exchange to life. For example, Sygnum Bank continues to make headlines regarding its September launch date as the world’s first digital asset bank. Also, Deutsche Bourse saw heavy publicity this year after it completed a successful proof of concept of its securities trading ledger. These tests proved many of the advantages obtained when settling securities transactions using distributed ledger technology. Notably, the technology can also tokenize and exchange equity and cash tokens

Daura – SDX Exchange

Duara is an advanced digital share register. The firm also specializes in the issuance of security tokens. In the duara ecosystem, one Tokenized share equates to one newly created share. The reduced costs and added speed simplifies the entire share issuance process. Duara enable enables SMEs to sell stakes in their businesses while reducing the costs of crowdfunding campaigns significantly.

SIX Makes Moves

SIX appears to be ready to take the next steps towards the development of the SDX exchange. The firm’s acquisition of duara shares proves that the company is ready and willing to take all the necessary actions to ensure the success of SDX. Consequently, you can expect to see a lot of hype surrounding the launch of this highly-anticipated platform in the coming months.

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Exchanges

Boerse Stuttgart Subsidiaries to Benefit from Investment by SBI Holdings

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Boerse Stuttgart Subsidiaries to Benefit from Investment by SBI Holdings

SBI Investment

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.”

Commentary

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.”

Boerse Stuttgart

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.

SBI Holdings

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.

Boerse Stuttgart Launches Digital Exchange

Securitize to Expand within Japan after Recent Investment

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DX.Exchange Goes Bankrupt – CX Technologies Ltd

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DX.Exchange Goes Bankrupt - CX Technologies Ltd
The Estonia-registered crypto exchange, DX.Exchange announced that the company had begun bankruptcy proceedings. The news was somewhat expected after the company closed its doors just a few weeks earlier due to a petition filed against the firm by employees awaiting payroll. Company officials say they have no money left in their bank accounts. Now, a slew of workers and business affiliates await court proceedings.

Bankruptcy Petition

The official bankruptcy petition filed on Oct. 24 alleged that the DX.Exchange owed 78 former employees payroll for the months of September and October. These employees included a variety of workers from CX Technologies Ltd., the company behind DX.Exchange. The petition sought to have the exchange dissolved by an Israeli court.

Unpaid Suppliers

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.

DX.Exchange

The much-hyped DX.Exchange promised to deliver an efficient trading experience on the blockchain. The company planned to trade all types of cryptocurrency including security tokens. According to the company’s documents, the exchange had agreements to list some big-name tokenized securities such as Tesla and Apple stock.
DX.Exchange
DX.Exchange

Security Tokens on the DX.Exchange

When questioned about the security token aspect of the exchange specifically in a recent interview, DX. Exchange CEO, Daniel Skowronski explained that the company applied for an MTF (multilateral trading facility) exchange license under a different entity but never completed the requirements prior to filing for bankruptcy.

Shady Dealings

Interestingly, this story goes much deeper. Apparently, it was reported that Limor Patarkazishvili (DX.Exchange owner’s wife) was the sole owner of another firm that was raided by the FBI in 2018. The company, SpotOption, allegedly was a major player in a large international binary options scam. When investigators delved deeper, they discovered that both companies shared staff.
At first, the DX.Exchange denied any involvement in SpotOption. Eventually, it came to light that Limor Patarkazishvili was the main shareholder in the firm. She owed 99 percent of the shares. This discovery only fueled speculation that the couple wanted to skip out on their past-due payments.

Will Employees and Affiliates Get Paid?

Skowronski publicly claimed that his company is not in “an exit scam.” Unfortunately, this was right before the company closed its doors. For now, the holidays could be bumpy for employees of the DX.Exchange as they attempt to cope with the financial losses.
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