After the market value shrinks by 80%, Overstock.com calls the blockchain gambling

Text: a trip

Source: Muggle Pie (ID: muggle_block)

On October 28, 2019, influenced by China's favorable policies, the US stock blockchain stocks rose in tandem. US retail giant Overstock.com shares also rose 5.4%, up to $11.89.

However, compared to the previous “$89.8” peak, Overstock.com’s share price has fallen by 80%.

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Unlike the giants that were invented by the Muggle, the peaks and valleys of Overstock.com are interpreted by blockchain and cryptocurrency.

As early as 2014, Overstock.com was involved in the blockchain and cryptocurrency business, but after five years, this part of the business not only did not bring much benefit to the company, but even led shareholders to go to court, accusing Overstock.com. The CEO and some of the executives are not doing business.

The company's share price has shrunk all the way, the original CEO has also left, and now Overstock.com is standing at the crossroads of destiny, and the new CEO, who is on the verge of death, chooses to continue betting on the blockchain and cryptocurrency tables.

Fanatic liberal

 

"Overstock", Chinese literally translated as "excess inventory", the name is very straightforward to point out the company's main business – the backlog of goods retail.

Overstock.com was able to get involved in the blockchain in 2014, and former CEO Patrick M. Byrne contributed to it.

Since buying Discounts Direct from Robert Brazell in 1997 and renaming it to Overstock.com, Bourne has been CEO of Overstock.com for 20 years.

Bourne, a Ph.D. student with a Ph.D. from Stanford University, is an avid liberal. He believes that the economy should not be controlled by central agencies because "these institutions claim to be neutral…but they are becoming tools for the country to oppress the weak."

Therefore, when Bourne first touched Bitcoin, he was intoxicated and became a faithful believer. He has repeatedly praised Bitcoin in public, and was even obsessed with wanting to sell Overstock.com's retail business, betting on blockchains and cryptocurrencies.

Of course, this "bet" is too big to end up.

Later, Bourne's enthusiasm for Bitcoin extends to the blockchain technology behind Bitcoin.

In an interview with Chainb.com, Bourne once said: "Bitcoin and cryptocurrency are not necessarily the future currency, but the blockchain must be the future technology."

Investing in the currency

 

According to the Muggle query data, Overstock.com is the first large-scale enterprise in the United States to accept bitcoin payments.

At the end of 2013, Bitcoin prices exceeded $1,000; at the same time, Bourne began frequently saying that he would open the Bitcoin payment portal on Overstock.com.

In early January 2014, Overstock.com entered into a partnership with Coinbase, the largest compliant cryptocurrency exchange in the United States, to officially accept bitcoin payments.

Source network

 

By August 2017, Overstock.com announced a partnership with ShapeShift to support other mainstream cryptocurrencies as payment methods, including Ethereum, Litecoin and Monroe.

Overstock.com's play in blockchain and cryptocurrency can be divided into two parts: one is through the wholly-owned subsidiary Medici Ventures in the blockchain field, investment, acquisition, cooperation; the other part is the establishment of securities generation Currency trading platform tZERO, directly involved in cryptocurrency.

In the year of official acceptance of Bitcoin payments, Overstock.com established a wholly-owned subsidiary, Medici Ventures. According to the Muggle Party, Medici Ventures has invested in at least 20 blockchain startups, including Voatz, Chainstone Labs, GrainChain, etc., covering identity verification, land ownership, financial assets, capital markets, supply chains, and voting six. aspect.

The model that Medici Ventures is called "unique" by Forbes is that it not only invests vertically, but also tries to combine these companies in a horizontal direction to create synergies. Medici Ventures also gave these companies a unified name – "Keiretsu" (Japanese term for companies with interrelated interests).

In addition, Overstock.com is the “first mover” in the field of STO (Security Token Offering), which in September 2017 established a cryptographic currency exchange tZERO regulated by the SEC.

Since Overstock.com has an ATS (Alternative trading system, an exchange trading system issued by the SEC), tZERO is also indirectly a regulated STO platform.

tZERO first appeared in the form of ICO. In December 2017, Bourne announced that tZERO will issue 500 million tZERO tokens and is expected to raise more than $500 million.

With the hot cryptocurrency market, tZERO has won the favor of top investment institutions.

In early January 2018, Bourne announced that tZERO had received a $100 million investment from billionaire George Soros' quantum fund.

In fact, before and after the launch of tZERO, Overstock.com's share price began to rise, and reached its peak after receiving Soros investment.

According to Muggle statistics, since August 2017, Overstock.com's share price has risen from 22.25 US dollars, and has been pulled up to 89.8 US dollars at the end of January 2018. The share price rose by 329.28% in five months, and the amplitude once reached 471.88%. Retailer Overstock.com has also transformed into a blockchain concept stock.

Under the double stimulus of the cryptocurrency bull market and the surge in stock prices, Bourne once considered selling Overstock.com, the All in blockchain, and hired a consulting firm to help study the possible ways to sell the company.

Berne at the time said ambitiously that he would be committed to let tZERO "replace the capital market platform of Wall Street and replace the middlemen of traditional securities trading buyers and sellers with blockchain technology."

However, the good times are not long, the cryptocurrency market is changing rapidly, and Bourne and Overstock.com have fallen from heaven to hell.

 

The stock price has shrunk by 80% and is deeply mired in class actions.

 

According to public data, Overstock.com's share price has shrunk by as much as 80% since hitting a high point in early 2018.

There are many factors that have caused its share price to go down. The first thing that has to be said is the regulatory uncertainty of Overstock.com's tZERO project.

On March 1, 2018, Overstock.com mentioned in a public document that tZERO's ICO project began its SEC review in February 2018.

Although the document states that Overstock.com is “voluntarily cooperating with regulators”, its share price is still affected by this decline by 9.3% to $54.8.

Second, the two sell-offs of founder Bourne were also one of the factors that caused Overstock.com's share price to fall.

In September 2018, Bourne sold off $20 million in Overstock.com stock. Although he said in an open letter that the sale was to invest in Medici Ventures and "to fulfill tax obligations."

But this argument clearly does not convince people that Overstock.com's share price fell by a third in a month after Berne's first sell-off.

Bourne sold the stock for the second time in May 2019, this time he sold the founder's share capital of Overstock.com worth about $13 million, this time his reason became to "subsidize" his salary and continue to invest. Blockchain project.

Bourne’s move intensified investor panic and caused the overwhelming share price of Overstock.com to hit again, falling 10.66% in the week.

Again, Overstock.com's share price continued to fall. There was another factor. Finally, the April 2018 lawsuit gave Overstock.com a critical strike.

On April 8, 2018, Pomerantz lawsuit filed a lawsuit against Overstock.com and some of its executives because the defendant failed to identify the ICO project on Overstock's platform as a huge risk or even illegal, and concealed Medici Ventures from investors. The fact that the blockchain business is losing money.

In September of this year, Overstock.com investors launched a class action lawsuit, pointing to Overstock.com founder Bourne. Investors believe that Bourne has “three sins”: one is suspected of fraud, and the other is that the blockchain business that he strongly advocates is flawed and does not bring corresponding returns. Third, Bourne did not inform Overstock.com before selling the stock. Shareholders cause their interests to suffer.

It is worth mentioning that Bourne, who repeatedly disclosed that he wants to sell Overstock.com's retail business, canceled the plan in March 2019 because "if the retail business is sold at this stage, its (Overstock.com) revenue will be Reduced to insignificant."

Overstock.com's blockchain and cryptocurrency businesses have been hit hard.

As early as August 2018, investment firm GSR Capital pledged to invest a total of $404 million in Overstock.com and its subsidiaries. However, at the end of 2018, the investment began to change. During the period, the amount of investment changed. The final result was that Jinshajiang Capital invested $5 million in tZERO in the “traditional form”, which was very different from the initial discussion of $404 million. far.

Coincidentally, there is a problem of capital chain breaks within Overstock.com. In October 2019, Sonic Zhang, the largest shareholder of Overstock.com's Bankorus, said in a statement that the company had no funds and employees had resigned.

In addition to dealing with regulatory inquiries, class actions, stock prices, and the lack of funds, Overstock.com's blockchain business is no longer sought after by Soros and others.

Dramatically, in August of this year, Bourne wrote to shareholders that he had a close relationship with a Russian female spy, so he did not affect the company's affairs, so he chose to resign as CEO of Overstock.com.

In the week before his departure, Bourne privately sold all of the remaining Overstock.com shares in his hands, cashing nearly $100 million. The stock price of Overstock.com affected by this fell by 20.99% after that.

The high-light moments of the old e-commerce merchants came to an abrupt end. After more than a year, Overstock.com reached the crossroads of destiny.

 

Unfinished "gambling"

 

Despite the absence of highlights, whether it's leaving Burne on Overstock.com or losing overborn's Overstock.com, they have chosen to continue betting on the blockchain and cryptocurrency tables.

One month after leaving Overstock.com, Bourne published an article titled "A Letter to Colleagues from Overstock," who said he would put the proceeds into "the opposite of the economic cycle," including gold. Silver and two cryptocurrencies.

This also means that Bourne, who used to cover up his true intentions with such excuses as “paying taxes” and “compensating for wages”, has finally begun to fully bid on the blockchain and cryptocurrency.

After Born's departure, Overstock.com appointed Jonathan Johnson, the former president of the company, as interim CEO, and he chose to continue to focus on the blockchain and cryptocurrency businesses.

In fact, Jonathan, like Bourne, is also very interested in the blockchain.

As early as June 2018, Jonathan publicly stated: "Digital currency is the best way to do business, it is cheaper than existing systems (such as credit cards) and can reduce the cost of the company."

By February of this year, Jonathan still firmly believed in cryptocurrency and blockchain technology, and believed that the bear market of cryptocurrencies would make people more likely to pay attention to the company.

But unlike Bourne, Jonathan chose to abandon ICO's main STO.

On the one hand, he hopes to establish tZERO as a securities-based token trading platform, and has established cooperative relations with media startup BLOQ FLIX, film production company Vision Tree, and real estate developer Alliance Investments to promote the latter's securities issuance business.

On the other hand, tZERO itself also issues securities-type tokens.

One year after the lock-up of the regulatory requirements, tZERO's securities token "TZROP" was opened to the secondary market in August this year. Jonathan also removed the restrictions imposed by Bourne on the transaction (eg shareholders must be Dinosaur Financial Group opens an account in order to trade, so that stocks can be traded freely.

In fact, from ICO to STO, tZERO, like most blockchains and cryptocurrency companies in the United States, continues to explore how to better meet US regulatory needs. In September of this year, Overstock.com also submitted an S-3 form to the US Securities Regulatory Commission to register digital preferred stocks based on blockchains in order to make tokens more compliant.

However, despite the road has been opened, tZERO still faces many problems.

First, how to make the blockchain business realize profit quickly?

According to the 2019 Q2 financial report disclosed by Overstock.com, the company's retail business revenue accounted for 98.3% of total revenue, and the revenue generated by the tZERO business accounted for only 1.5% of its retail business revenue. According to the previous article analysis of Caijing.com In this case, the pre-tax loss of the tZERO business is 10% higher than the pre-tax loss of the retail business.

At the same time, according to previous deep-chain articles, since the official launch of the tZERO platform in January this year, TZROP has fallen 60% from the opening price in less than 10 days, and “technical failures have occurred many times after the launch”. ". Considering that there are currently not many users of the STO market, it is undoubtedly very difficult for tZERO to acquire a large number of incremental users.

Second, is it wise to bet on STO?

In the beginning, people hoped that "STO" would become a buffer zone for "ICO" and "IPO", hoping that it would have both the convenience of ICO and the compliance of IPO. But at present, STO is still in its infancy, facing the dual pressure of attracting excellent assets and qualified investors.

And what will the future of the blockchain and cryptocurrency “hobby gambling”, which lasted for five years and two CEOs to take over, will go in the future? The Muggle will also continue to pay attention.

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