Hong Kong Fund's Projected $400 Million Overstock Investment Ends With $5 Million Close

GSR Capital has finally closed on its investment in tZERO, Overstock.com's security token trading platform, after months of delays and revisions to the deal.

Instead of buying $30 million of tZERO tokens, as previously agreed, the Hong Kong private equity fund invested just $5 million in tZERO equity, in the traditional form.

Makara Capital, a Singapore fund brought into the deal by GSR, is still conducting its due diligence of tZERO, and may yet invest the money it pledged earlier, Overstock said.

Despite the sharp reduction in proceeds, tZERO CEO Saum Noursalehi told CoinDesk that the $5 million investment was "a decent offer." The investment consists of $1 million in U.S. dollars, $1 million worth of Chinese Renminbi, and $3 million worth of "Certain securities," according to Overstock.

The original deal with GSR, announced last summer, was expected to bring $404 million to tZERO, but was postponed several times and downsized to $100 million in March, and then to $30 million in April.

The two firms were supposed to co-lead the $100 million investment in tZERO. As tZERO has not obtained as much external investment as it hoped for, it will for the time being rely on cash from the parent company: earlier plans to sell the Overstock.com online retail business were postponed, too.

To raise additional capital, Overstock sold some of its stock recently, he said - not that it all will go to tZERO, but if it needs money those funds can get "Pushed down" to it from the parent company, according to Noursalehi.

According to Noursalehi, tZERO's team will conduct due diligence of the tokens issued on Securitize and pick some of them to trade on the ATS. "Securitize seems to be executing well in the space and providing good quality assets," Noursalehi said.

Also on Thursday's earnings call, Overstock gave a demonstration of the previously announced tZERO crypto trading app, scheduled to go live in June.

In the meantime, Overstock is moving some of its own shares to tZERO, a plan it recently notified shareholders about.