tZERO 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.
It’s one of the first Security Token Offerings on a decentralized public network, and was conducted in full compliance with the US securities laws, according to a company statement citing tZERO CEO Saum Noursalehi.
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 (while this role is unnamed in the release, Morgan Stanley is an investor). 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.
tZERO’s chair, and CEO and founder of Overstock.com, Patrick Byrne, compared the development of real-time settlement and the cryptosecurity to breaking the speed of sound and first manned space orbit. A well known critic of naked short selling, Byrne said in a statement: “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 US-based exchange it is building in partnership with BOX Digital Markets, as well as international securities exchanges.