Touted as the world’s first security token exchange, tZERO is a blockchain subsidiary of retail giant Overstock.com. On Aug. 9, tZERO announced a $270 million investment from GSR Capital.
Overstock Share Prices Rally Following tZERO Investment
Hong Kong-based private equity firm GSR Capital has revealed plans to purchase 18 percent of tZERO’s equity for $270 million.
In total, GSR will invest up to $374.55 million in tZERO in exchange for common equity in both the blockchain subsidiary and Overstock. The purchase agreement also states that GSR will buy $30 million in tZERO security tokens from Overstock in addition to 3.1 million shares of OSTK common stock.
t0.com (tZERO) is a majority-owned subsidiary of retailer Overstock.com that was established with the mission of integrating commercial-scale blockchain applications into the financial sector through a new security token software.
In a press release, tZERO CEO Saum Noursalehi expressed excitement for the company’s new partnership:
“We are honored to have GSR Capital as a strategic investor. 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 Chairman and founder, Sonny Wu shared similar sentiments and described his vision for developing a globally-accessible cryptocurrency derivatives marketplace:
“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.”
Following news of the investment, Overstock share prices increased nearly 21 percent in after-hours trading. During the trading day, OSTK rallied 4.47 percent and closed at $38.60, reports CNBC.
Additionally, on July 2, GSR purchased 16 million tZERO security tokens for $160 million. According to China Money Network, GSR’s purchase of tZERO security tokens would not constitute company equity but would entitle investors to dividends. Specifically, 10 percent of tZERO’s adjusted gross revenue will be distributed on a quarterly basis.
tZERO closed its security token offering (STO) on Aug. 6 and reached a total company valuation of $1.5 billion.
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