Overstock Shares Pop As Company Sets Date For ICO

Shares of cryptocurrency pioneer Overstock.com climbed more than 5% on Tuesday after the company revealed that it will launch an ICO on Nov. 1 using its proprietary tZERO platform, a strategy that will allow Overstock to raise capital without diluting its float.

As far as we can tell, the Overstock ICO would be the first conducted by a large, publicly traded US company, and could potentially open the door for other corporations to utilize the ICO as an alternative means of raising capital.

The offering will will run through Nov. 15, Overstock said.

Overstock grabbed headlines last week when shares of the “obscure e-commerce stock” soared 14% to their highest level in four years, purportedly driven by excitement surrounding the company’s blockchain investments. The share-price pop occurred as IBM and JP Morgan Chase & Co. revealed they were working with banks to create blockchain-based platforms to facilitate global payments.

Similarly, its shares soared in September after the company unveiled what it billed as the “first SEC-compliant” trading venue for ICO tokens. In a ruling issued over the summer, the SEC declared that all digital tokens must be treated like traditional securities and registered with the agency.

The company also revealed Tuesday that it has developed a blockchain-based tool aimed at curbing “naked” short selling – when brokers allow investors to bet against a stock without first obtaining shares to borrow and sell. Like the ICO, this tool will operate atop the company’s tZERO blockchain platform. According to Overstock’s Medici Ventures unit, which developed what it’s calling the “Digital Locate Receipt” tool, the DLR will allow short sellers to more easily locate shares to borrow and sell short.

Overstock CEO Patrick Byrne has spent decades fighting naked short selling, even instigating a feud with the SEC ten years ago over his claims that naked short sellers were illegally targeting his company.

As CoinDesk points out, the DLR, which is expected to be formally revealed at the Money 20/20 conference in Las Vegas this week, is designed to be a blockchain-based versions of Regulation SHO "locates," which were introduced in 2005 to cut down on investors trading against other people’s stocks during off-hours trading. The regulation was meant to give stock owners the assurance that they could reap rewards from this off-hours trading by formally lending the stock – and thus to discourage short sellers from merely promising to borrow the stocks that they wanted to bet against.

Overstock’s ICO will add to the more than $3 billion raised by ICOs since the beginning of the year. However, the ICO market – which has been widely acknowledged as a cesspool of fraud and abuse – has recently encountered some notable setbacks. For example, Tezos, one of the highest selling and most hyped ICOs of the year, recently disclosed that progress on its promised product has stalled, meaning investors likely won’t receive their Tezos tokens by the company’s year-end deadline.

Elsewhere, crackdowns on ICOs in the US have led to the first civil actions against alleged fraudsters using the technology to solicit money from gullible investors.

But given Overstock’s longtime involvement in the space, it’s ICO will likely attract a modest amount of attention.

Comments

NoDebt YUNOSELL Tue, 10/24/2017 - 14:07 Permalink

"a strategy that will allow Overstock to raise capital without diluting its float."Tyler, you're going to have to explain that one to me.  If the coins don't represent shares of ownership in the company, then you're just lending the company money (under what terms?).  If the coins DO represent shares of ownership then they're selling the company public TWICE (once through shares of stock and a second time through coins).  If it's the latter, I'd call that HIGHLY dilutive.I thought maybe they were going to retire shares of stock with the proceeds from the coin sale, but then they wouldn't be raising new capital.  They'd just be changing how ownership units of the company were defined and traded.Somebody smart please explain this to me.  I can't logic my way through this.  

In reply to by YUNOSELL

totenkopf88 Tue, 10/24/2017 - 13:33 Permalink

Hey Byrne- it's nothing personal- they're shorting Overstock because it's a POS. He's another one of these idiotic CEOs that looks at AMZN and thinks that that should be him- meteoric, no-drop stock price on no profits.

BuckWild shizzledizzle Tue, 10/24/2017 - 16:26 Permalink

Spent 3k there this month. Opened a 15 k credit line through them. Zero interest for 24 months on large purchases.  They are the only place that has quality non china made organic Sheets, Towels and Bedspreads. We recently decided if we are against GMO's we should stop buying Gmo clothing and linens! We always try to buy American or any thing but China! Folks if you want cheaper move to China or Mexico. If you want to have a good lifestyle buy the best where ever it comes from!

In reply to by shizzledizzle

Winston Churchill Tue, 10/24/2017 - 13:44 Permalink

Garbage in=garbage out.TPTB don't need to do anything, these greedy CC's pumpers are going to kill the whole sector.If they don't,which looks unlikely, there's always the backdoors in their computers machine  code, bios, andfirmware,whenever TPTB want to take it over.Surprised the hackers haven't already exploited them,yet.What a bunch of dumbasses and circus clowns.

Meyer Blinder Tue, 10/24/2017 - 15:06 Permalink

Patrick Byrne the CEO of Overstock is gunning for naked shorts. The real story here is T-Zero, making it impossible to short a non legitimately borrowed (hypothecated) share. Any movement by a SP500 firm from NASDAQ or NYSE to this trading platformwill create a shitstorm for the Banksters. Imagine if you could only short actual physically existing PMs. https://tzero.com/about/ 

RabbitChow Tue, 10/24/2017 - 15:20 Permalink

Byrne's basic argument for many years is that naked short selling killed many startups from the traditional public marketplace.  Many were unable to raise the amount of capital they needed to survive.  His biggest mistake was taking the company public.  It was at the worst of times when hedge funds were naked shorting everything.  I remember at one time, Byrne had actually repurchased enough shares (certificated) that he wanted to take the company private.  But the SEC wouldn't allow that. I'm not sure about the function of the ICO, other than to raise money in the new 'shares' of the company.  In a way it's good, because blockchained coins or tokens cannot be shorted unless lent  The new facility announced will allow holders of coins to lend them to be shorted, so that those willing to play that game can do so, and the lenders will earn interest on their loan of coins.  That sounds great, but if they didn't borrow the shares before, then why would they borrow them now.