tZERO ICO Under Federal Probe, Overstock Confirms

Overstock’s tZERO initial coin offering (ICO) is under federal investigation for potential violations of securities laws, the company confirmed on Thursday. The announcement came less than a day after The Wall Street Journal reported that a federal probe into the cryptocurrency market was underway.

SEC Probes tZERO, Other ICOs

The Securities and Exchange Commission (SEC) has asked Overstock to willfully hand over documents related to the structure of the tZERO crowdsale, which has already passed $100 million in funding, according to company CEO Patrick Byrne. The disclosure was made in an SEC filing initially dated Dec. 18 but released on Thursday.

In the filing it was stated that Overstock has been contacted by the SEC’s enforcement decision to inquire about the ongoing sale of tZERO. However, the filing clarified that the investigation is ongoing and that no evidence of a violation has been found as of yet.

“While the SEC is trying to determine whether there have been any violations of the federal securities laws, the investigation does not mean that the SEC has concluded that anyone has violated the law,” the filing said. “Also, the investigation does not mean that the SEC has a negative opinion of any person, entity, or security.”

According to WSJ, the securities regulator has issued dozens of subpoenas and information requests to companies and advisers involved in the crypto industry. The report indicated that, in addition to ICOs, the SEC was targeting Simple Agreements for Future Tokens (SAFTs), which have been designed to self-regulate the ICO market. tZERO is considered a Simple Agreement for Future Equity (SAFE), which is derived from the SAFT protocol.

tZERO Crowdsale

Overstock’s highly anticipated tZERO project is expected to become one of the biggest crowdsales ever. CEO Patrick Byrne announced in December that around 2,000 investors signed up for the project on the day one of the sale, with the highest individual offer coming in at $5 million. The company is eyeing a total raise of $250 million.

The project is developing an SEC-regulated alternative trading system (ATS) that Byrne says can replace Wall Street. It works by linking market buyers and sellers via dark pool backed by a decentralized ledger.

On Jan. 27, tZERO announced that it had extended its private offering until Mar. 30, 2018. That was the last update on the token sale posted to the project’s official website.


Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi