Overstock.com, the on-line retailer led by multi-industry disruptor Patrick Byrne has seen its share price surge nearly 100% in the past four weeks, and not because of online shopping spikes during this holiday season. And not because it was the first retailer to accept bitcoins back in the day when no other retailer even understood the concept of distributed ledger and blockchain, the elements that power bitcoin, the ubiquitous cryptocurrency whose price has gone from $500 to over $20,000 in less time than it takes most companies to float an initial public offering.

Along the way, we can guess that the former online discount retailer of stuff has watched his net worth increase by at least several hundred million dollars, as the shares of all of his various holdings have increased multi-fold. Its because Patrick Byrne has been hard at work during the past number of months executing a stealth strategy by leveraging his purchase of a SPAC (special purpose acquisition company) that has made Overstock a virtual holding company whose portfolio of companies now includes (i) Medicia Ventures, a cross between a PE and VC platform that is focused on cryptocurrency enterprises (ii) an on-line brokerage that was formerly a woman-owned broker-dealer known as Muriel Siebert & Co and renamed “tZero” that will enable day traders to make $2.99 stock trades and pay in cryptocurrency, (ii) a stake in Delaware Board of Trade, an electronic exchange run by the former head honcho at the Philadelphia Stock Exchange former vice-Chairman of NASDAQ OMX and positioned as the first and only blockchain based Alternative Trading System fully licensed by the SEC, which will float Initial Coin Offerings (ICOs)  and enable investors to buy and sell bitcoin based bond funds that are packaged in similar fashion to exchange-traded funds aka ETFs.

Having a successful ICO is usually easier and costs less than an IPO, the penalties for fraud remain the same. Make sure you document everything and have an experienced partner in your corner to ensure you are meeting obligations to both investors and, eventually, regulators.

But every road has its bumps. A planned initial coin offering (ICO) for Overstock blockchain subsidiary tZERO, scheduled to go live at midnight Monday, has yet to launch as originally anticipated. While little is known about the now nearly day-long delay, a countdown clock on SAFTLaunch.com, the issuance portal for tZERO’s token, has expired without any update to the company’s website or social media accounts. Indeed, CoinDesk’s calls to key Overstock executives, including CEO Patrick Byrne, went unreturned or unanswered today.

To continue reading, please visit Prospectus.com

How Patrick Byrne Levered a SPAC to Create Cryptocurrency Kingdom

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(Courtesy of RTTNews) – The Securities and Exchange Commission said Monday that its new cyber unit has obtained an emergency asset freeze to halt an Initial Coin Offering or ICO fraud.

The SEC noted that the ICO fraud, advanced by “PlexCorps” owned by a mysterious shell company known as DL Innov Inc., which is operated by Canadian resident Dominic Lacroix and Sabrinia Paradis-Royer raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month.

These charges are the first to be filed by SEC’s cyber unit, which was created in September 2017.

The SEC’s complaint was filed in federal court in Brooklyn, New York. The complaint alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin on the Internet to investors in the U.S. and elsewhere by claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days.

Based on its filing, the SEC obtained an emergency court order to freeze the assets of PlexCorps, Lacroix, and Paradis-Royer. These charges are the first to be filed by SEC’s cyber unit.

The complaint seeks permanent injunctions, disgorgement plus interest and penalties. In addition, the SEC is seeking an officer-and-director bar for Lacroix, and a bar from offering digital securities against Lacroix as well as Paradis-Royer.

Issuers of Initial Coin Offerings: Don’t Get Caught Short By Failing to Follow the Spirit of Securities Regulations. Industry experts at Prospectus.com can provide sage guidance for staying inside the regulatory goal posts and prepare investor offering documents that conform with the spirit of the regulatory regimes governing ICO initiatives.

The SEC’s cyber unit was created in September to focus on misconduct involving distributed ledger technology and initial coin offerings, the spread of false information through electronic and social media, and hacking as well as threats to trading platforms.

“This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing. We acted quickly to protect retail investors from this initial coin offering’s false promises,” said Robert Cohen, Chief of the Cyber Unit.

In August, the SEC’s Office of Investor Education and Advocacy issued an Investor Alert warning investors about scams of companies claiming to be engaging in initial coin offerings.

BrokerDealer.com expresses thanks to RTT News for the coverage content. For the full article from RTTNews.com, please click here

SEC Cyber Unit Brings First ICO Fraud Charge, Initial Coin Offerings No Longer Under Regulators’ Radar

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Bitcoin, the crypto-currency that initially became infamous as the tender of choice for drug traffickers and mercenaries, may be coming to a trading desk or institutional portfolio near you – and sooner than you think.

“2014 is going to be the year Bitcoin hits Wall Street,” said Barry Silbert, founder and CEO of SecondMarket, a capital-raising platform for private companies and investment funds. Indeed, there is a growing consensus in some corners of Wall Street and the buyside community that the $7.8 billion  Bitcoin industry is going to become the new, flashy darling of investors, with dedicated digital currency funds, venture capitalists and asset managers all chasing after those 12 million bitcoins currently in circulation.

“Digital currencies like Bitcoin are not going away,” Silbert explained. “And Wall Street and the regulators know this, they’ve studied how to deal with it, and now they are starting to understand its potential.” SecondMarket has gone heavy into the Bitcoin phenomenon, launching the Bitcoin Investment Trust, a $70 million open-ended trust that invests exclusively in bitcoins, as well as a dedicated desk of 10 traders who buy and sell bitcoins for the trust and other institutional clients. SecondMarket is also creating what it hopes to be the largest, best-capitalized and well-run Bitcoin exchange in the U.S., and is enlisting banks and Bitcoin-related firms to be exchange members.

“The number of inquiries and requests from finance industry professionals for us to prepare compliant investor offering documents for crypto-centric funds is certainly keeping us busy”, said Paul Azous, CEO of Prospectus.com. “We don’t see this as some type of anomaly that is connected to a short-term fad, many of the funds we are working with are forward-thinking folks who realize that blockchain applications will be expressed in nearly every business process.”

In addition to preparing investment fund offering documents, Prospectus.com helps blockchain-based startups craft white papers, presentation decks that resonate with accredited investors and through a captive network of crypto industry consultants, the firm guides those advancing Initial Coin Offerings (ICOs).

Alec Petro, managing partner at Bay Hill Capital Management LLC in Duxbury, Mass., shares Silbert’s passion for Bitcoin. “We’re betting that the market is going to be there, maybe not next month, but soon,” Petro told Traders. “Institutional players are going to want to be in this space.” Petro almost single-handedly plays the role of market-maker in Bitcoin options on the Atlas ATS exchange, the only Bitcoin exchange currently offering options on the digital currency. He also runs a small fund, consisting entirely of Bay Hill Capital partners’ money, that invests in Bitcoin.

Everything Bitcoin needs to break into the mainstream of trading and investing is achievable and starting to happen, according to Petro. “More merchants are taking it and that means more liquidity, more stability in price and, ultimately, more confidence,” he said, checking off the events that will ultimately lead to the Great Bitcoin Revolution that he, Silbert and others are working toward.
The Revolution on Hold
Before the revolution can really begin, of course, Bitcoin has myriad issues to address.

Still, not everyone is convinced. Fitch Ratings threw some cold water on the Bitcoin buzz in an April report, noting that although total Bitcoin consumer transactions averaged $68 million per day in February, a more than tenfold increase compared with the year before, it was still minimal compared with other payment processors and credit card companies. In trading, Bitcoin ranked better, according to Fitch, citing an average daily transaction volume in Bitcoin in February equaling approximately 1 percent of Bitcoin’s total market capitalization. Over the same period, a sample of the largest U.S. equities showed that daily trading volumes were approximately 0.6 percent of total market capitalization, according to Fitch.

Supporters of Bitcoin are unshakable in their faith, however, saying the crypto-currency will play a big part in the future of payment processing, and that future will see an increasing number of trading platforms and investment funds dedicated to Bitcoin.

The Early Adopters
Brett Stapper, co-founder of Falcon Global Capital, a Bitcoin investment fund, is one of those faithful. But he got an early lesson in how hard Bitcoin’s bad past may be to shake. Speaking at a conference in Washington, D.C., about Bitcoin, Stapper thought he’d also reach out to some legislators about issues surrounding Bitcoin. He was stunned at how negative the reaction was to it.

“They had a very bad view of Bitcoin,” Stapper said. “And that worried me because these were the people that were basically in control of the future of Bitcoin in the U.S.” Resolving to rehabilitate the image of Bitcoin in the minds of these doubters, Stapper registered himself as a lobbyist and began to educate people about Bitcoin.

Now, he said, he spends his days on the phone as a Bitcoin evangelist, talking to lawmakers and potential investors. Of course, he’s got skin in the game – Falcon Global Capital runs a $7 million SEC Regulation D Private Investment Fund and is launching a second fund, for offshore investors, later this summer. The funds operate similarly to a gold-holding hedge fund, offering investors exposure by purchasing bitcoins on their behalf, with investments ranging from $25,000 to $10 million, according to the firm’s Website. The bitcoins are then stored in Falcon Global Capital’s digital vault, providing investors easy access and protection from theft.

Fund firms like Falcon Global, SecondMarket and Bay Hill aren’t the only ones to have fallen under Bitcoin’s spell. The Winklevoss brothers, best known for their legal face-off with Mark Zuckerberg, the founder of Facebook, are awaiting final approval from the SEC for the first-ever ETF that tracks the price of bitcoins. Hedge funds and trading firms such as Fortress Investment Group, Sun Trading, Tradebot Systems, Coin Capital, Pantera Capital Management, Cedar Hill Capital and Havelock Investments have launched Bitcoin funds, or have gotten involved in trading or acquiring bitcoins. Venture capital firms such as Liberty City Ventures and Core Innovation Capital are investing heavily in Bitcoin start-up support companies, like wallet companies (which allow users to hold and store bitcoins) and Bitcoin-focused tech companies that are helping set up exchanges. Tech exec heavyweight Marc Andreessen also is a Bitcoin fan, supporters like to point out.

Still, the number of Bitcoin fan club members who are actually willing to put up their dollars in terms of investment or trading infrastructure development is small, albeit growing. “We are on the front lines of Bitcoin, paving the way for others to get involved,” Stapper said, adding that Falcon Global Capital is anticipating its funds will grow to a combined $100 million in assets by the end of the year.

SecondMarket’s Silbert is also expecting to have a very busy summer. SecondMarket is planning to launch its large U.S. Bitcoin exchange in a few months, and is spinning all of its Bitcoin operations – including the exchange and the Bitcoin Investment Trust – into a yet unnamed separate company.

For the entire story, please visit Traders Magazine via this link

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