Overstock Surges 23% on News it Will Sell Retail Business, Launch tZero Crypto

In an obvious act of desperation, Overstock will sell its retail business to launch a crypro business called tZero.

Overstock CEO Patrick Byrne is so certain about blockchain technology that he’s planning to sell Overstock’s retail business to Launch tZero.

Byrne announced tZero in 2015 and it has been losing money ever since, along with everything else Overstock does.

Overstock has invested $175 million in a fully owned unit called Medici Ventures Inc. that houses tZero and a collection of startups developing new uses for blockchain technology a method of recording, sharing and securing data over public computer networks that underpins bitcoin and other cryptocurrencies.

One startup is working with the Rwandan government to develop a digital property-rights platform. Another, Voatz, ran a blockchain-based pilot with West Virginia that allowed military personnel serving overseas to cast their votes in the midterm elections through a smartphone app.

Mr. Byrne’s quest has been costly for Overstock. Medici lost $39 million through the first nine months of 2018, following a $22 million loss in 2017. (All told, Overstock lost $163.7 million through the first nine months of 2018.)

Overstock shares also have suffered. In 2017, the company’s stock traced bitcoin’s mania, rising from $15 in the summer to nearly $87 by January 2018

Overstock Losses

Cold Fusion

I don’t care whether tZero is losing $2 million a month,” Mr. Byrne said in an interview. “We think we’ve got cold fusion on the blockchain side.”

Byrne declined to name potential suitors, but expects to wrap up a deal by February.

He envisions a platform that would trade assets that could be easily traced and tracked. Initially, it would trade security tokens—a combination of a bitcoin-like digital token and a traditional bond or stock. It is also developing a product called digital locate receipt, a way of tracking equities borrowed for short selling.

Trying to get all the regulatory approvals for this has taken time, and tZero has blown past several expected launch dates. The company says it will go live in the first quarter.

Still, security tokens are still more theory than reality. Mr. Byrne said tZero will have one asset available for trading when it launches: its own security token. Earlier this year, tZero closed on an offering of the tokens that raised $134 million.

Appropriately Named tZero

I like the name. It will head To Zero like most of the rest of the crypto business.

This is an act of pure desperation by a company that clearly running out of cash.

Of course, Byrne can stay in business as long as he can get get enough suckers to buy useless tokens.

Mike "Mish" Shedlock

Comments (9)
No. 1-7

Byrne is a disaster as a CEO.

Burning money on the latest fad always backfires.

It is clear if those companies were any good they could have got funding from VC's but since they got funding from Byrne it is clear they were mediocre at best.

Blockchain has been hyped up like Pets.com sock puppets back in the day...


"One startup is working with the Rwandan government to develop a digital property-rights platform"

I am willing to bet that nobody in the Rwandan government has any idea what these people are talking about, but as long as the money keeps coming, they'll smile and nod.

Mike Mish Shedlock
Mike Mish Shedlock


Yea, imagine investing in something because the Rwandan government did. LOL


@JL1 its somewhat of a damning indictment on the US economy that such nonsense keeps getting funded.


Blockchain is like electricity, plastic, graphene or crispr. It's a platform that will change the world... just give it a couple of decades to be more than a toy.

In this case, it seems like he's attached a rather lot of value to his rubber ducky.


Overstock (the name), seems like a place where manufacturers could go to dump their products, old chinese trick .. dumping. If the blockchain had any connection to company shares structure, anything of real value, then maybe it would be something. It looks more like overstock got pumped, and share price is about where it should be from historical perspective.


Actually I respectfully disagree. Do some research on this and you'll find Byrne has done his homework here. The retail operation isn't his focus anymore and he's been saying he wanted to sell it for months to focus all his attention on this new project. Top Wall Street bankers like GS make tens of BILLIONS of dollars annually loaning shares from pension funds to short sellers (unbelievable but true). The pension funds are getting ripped off and are fed up. What Byrne's team has developed via blockchain technology provides the funds the ability to stop this from happening and keep the money owed to them in the form of interest payments from the short sellers instead of giving it to the bankers. With pension funds so underfunded this has the potential of being a huge game changer for the pension funds and a threat to the big banks. Soros owns a piece as well as some other high profile guys. Keep it on your radar.