Business

George Soros Joins The Cryptoworld With $100 Million Investment In Overstock.Com – Inc (OSTK) – Update

Overstock.com gets $100 million investment from George Soros. George Soros is renowned as a Hedge fund manager and is reckoned as a heavy weight in the world of investments. Just before the year 2017 wound down, Quantum Fund, which is managed by George Soros, invested $100 million in Overstock.com by exchanging one warrant issued by Overstock.com Inc (NASDAQ: OSTK) and receiving 2,471,188 shares of Overstock’s common stock.

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George Soros photo
Photo by Niccolò Caranti

Overstock.com is engaged in selling a host of items including a wide array of home décor, furniture, and jewelry products and its shares rose by more than 200% during 2017 consequent to the announcement of its plans to commence digital coin trading in September last. Overstock has several extensions of its business accepting cryptocurrency transitions. The firm is also part of tZero that started working with two companies in the financial services sector – Argon and RenGen to develop what the firm stated as a ‘distributed ledger platform’ targeting the capital markets.

Patrick Byrne, CEO of Overstock also confirmed that significant part of the investment from George Soros would be used to fund blockchain work undertaken by the company. He also added that some $20 million would be deployed in funding DeSoto inc. Which is a joint venture in blockchain property venture and that these two businesses of Overstock.com would work more closely in the days to come. He added further that it could be the time that Overstock is seen as two different businesses. He went on to say that some 40 million unique visitors came to Overstock’s retail platform during the last month. And that as the company develops the blockchain companies and blockchain applications, its retail business would be significantly valuable in bringing traffic and awareness to its blockchain properties that the company expects to grow.

SEC filing does not name Quantum fund

Though the SEC filing did not name Quantum Fund managed by George Soros as the investor, (it did mention it in the 13F) and Byrne, the CEO of Overstock did confirm that Quantum Fund indeed was the investor. However, there has been no comment yet from Quantum Fund on this substantial investment, and that possibly is indicative of the shape of things to come in the global commerce landscape about digital currency. According to OverStock, about $80 million from the $100 million it has received from George Soros’ Quantum Fund would go into the flagship e-commerce platform of Overstock where bitcoin is accepted against payments.

Funds received from Quantum Fund not to be deployed in tZero tokens

Byrne also confirmed that the funds received from Quantum Fund would not be used for purchasing crypto tokens in the tZero ICO, though Overstock was buying tZero tokens worth $30 million in a separate deal and independent source of funds. tZero has received investor commitments to the tune of $100 million for its tokens. Byrne also added that Overstock would also be hiring people from across Wall Street who can bring risk management expertise to the table.

How George Soros investment in Overstock.com impacts the cryptocurrency landscape

Overstock is already upbeat about the crypto markets and the blockchain technology. The Overstock CEO is on record that he would possibly be looking at hiving off all the retail business it is involved with now, and focus on about ten blockchain companies owned by Overstock, through Medici Ventures which is a subsidiary of Overstock.com. Although this move comes at a time when the SEC (Securities Exchange Commission) is getting more and more concerned about fast-growing listed companies with multibillion-dollar taking the ICO route to raise fund, for Byrne, the CEO of Overstock.com, that is not a significant bottleneck. In fact, he states that 2017 has seen a considerable amount of ICO craze and many people have ended up with substantial losses, perhaps playing the wrong cards at the wrong time. The ICO markets rose from a mere $14 million in 2014 to a whopping $4 billion in 2017.

Byrne is also pretty much convinced that the Blockchain technology would change our world more than what the internet has done and goes on to say that sooner, than later, people would give up the federal currency and adopt the digital currency. He also finds the ICO route a more a convenient option to raise money for investment in business as compared to the more formal SEC or Wall Street.

But George Soros says cryptocurrency is a misnomer

Speaking at the World Economic Forum in Davos, George Soros says, Bitcoin or other cryptocurrencies are not currencies since a currency must have a store value. He adds that when a coin experiences 25% fluctuation in a day, that currency cannot be deployed for various uses such as paying wages since the value of the money would drop or gain by huge percentages within the day.

A day when we will have only blockchain technology and not the crypto markets

A potential threat that looms over the crypto markets is a world willing to adopt the underlying technology that drives the digital currencies, but not the coin attached to it. Federal governments are also concerned on multiple fronts like taxation, money laundering, criminal activities, and terrorism. Given the anonymity offered by blockchain technology, the chances of a healthy technology being put to wrong use are apparently on an elevated scale.

 

Update

Overstock/Tzero getting some attention from regulators

According to an 8k filing by Overstock Com on March 1, 2018, the enforcement division of SEC has requested the company for certain documents relating to its Tzero token and offerings made in February last.  Although the SEC is investigating a larger number of cryptocurrencies for potential violations, in the filing, Overstock has downplayed potential risk associated with the enquiry.  But, the stock markets reacted differently and Overstock saw its price dropping by as much as 10%.