tZERO

tZERO is a platform that integrates distributed ledgers with existing marketing processes. Its a subsidiary of overstock.com, a large American-based online retailer

About tZERO

tZERO is a platform that integrates distributed ledgers with existing marketing processes. Its a subsidiary of overstock.com, a large American-based online retailer. tZERO is labeled as a SEC regulated Alternative Trading System (ATS) and their plan is to transform and develop a token trading platform for trading crypto-securities, cryptocurrencies and classical equities. Basically what this means is, tZERO aims to bring an arsenal of financial tools to the crypto world. Furthermore, the long-term plans are to host future ICOs themselves what will be SEC and FINRA regulated. The vision is to revolutionize the existing IPO system and to integrate blockchain technology and all its derivatives into tradition capital markets functions.

Token Sale Use of Blockchain

Product

3.2
Product
Readiness

Is the product ready for use? Is there a working prototype or MVP? How long until it is operational?

4.0
N/A
4 - Beta or initial rollout.
Appeal

How appealing is the product? How good or necessary is it? Does it have a distinct edge?

3.0
N/A
3 - Interesting.
Target User Base

Is it mass market or niche?

3.0
N/A
3 - Has growth potential.
Competition

Are there many other similar solutions or is this one of just a few, or even one of a kind?

3.0
N/A
3 - Some normal competition.
Innovation

How innovative or inventive is the product, either conceptually or technologically?

3.0
N/A
3 - Partial, a novel approach or aspect.

Product

Digital Locate Receipt (DLR) Software

At the moment, a great deal of stock loan transactions are performed world wise using non-automated systems. This practice has some inherent issues – manpower, inefficiency and also the potential for the lending of a stock that is not actually owned by, or accessible to, the lender. In this context, it is possible that some entities will over-lend stock, causing naked short selling to occur. (The practice of short-selling a tradable asset of any kind without first borrowing the security/asset or ensuring that the security/asset can be borrowed)

tZERO’s DLR suite allows broker-dealer licensees with stock inventory to both load and manage their inventory via a front end system; they can provide locates to their clients who wish to short-sell stock or loan the stock to their clients who wish to borrow the stock. The suite also allows for the storage of information immutably to a proprietary or other blockchain.

SpeedRoute Execution Services

SpeedRoute, an electronic agency brokerage firm that executes U.S equities for broker-dealer clients, offers low latency, smart order routing solutions to access liquidity at every U.S. equity exchange and dozens of additional market centers.

Blue Ocean

Blue Ocean is an overnight trading platform for U.S. equities. U.S. equities markets are non-operation between certain hours (Usually 8:00PM EST to 4:00 AM EST) and thus tZERO is looking to address this market ‘inefficiceny’ as they call it by operating its ATS between these hours. This will allow customers and traders to maange overnight risk, and seek profitable trading opportunites that were not available to them prior.

tZERO are also planning to launch additional services. Robo Advising is expected to launch sometime during 2018 and is supposed to offer automated protfolio management compiled by a team of experts. tZERO also has signed a letter of intent with Siebert Financial Corp. to offer discounted online trading of U.S. equities to customers through Muriel Siebert & Co. and Overstock relationship.

Overall, tZERO’s products are very well catered to traders, brokers, and investors.

Product Whitepaper

Use of Blockchain

2.0
Use of Blockchain
Blockchain Development

Is blockchain technology essential? Does it make the solution significantly different and better?

1.0
N/A
1 - None; simple Ethereum based coin.
Disruptive Blockchain Advantage

How disruptive is the introduction of blockchain technology into the product's market space?

1.0
N/A
1 - None or indeterminate.
Need for a Custom Token (vs. BTC or ETH)

Is the token essential or could it be done just as well or better with fiat or Bitcoin?

5.0
N/A
5 - Real, tangible, utility-based value.
System Decentralization (besides token)

How decentralized is the system architecture other than the token (e.g., data collection, storage, access, and use, or decision making processes, etc.)?

1.0
N/A
1 - Essentially centralized.
Contribution to Blockchain Ecosystem

How compelling is the solution's contribution to the evolution of blockchain infrastructure and economy?

2.0
N/A
2 - Meh, okay.

Use of Blockchain

There isn’t much information available online as to what exactly is done with blockchain technology in regards to tZERO’s products. The only information available is that the tokens are ERC-20 tokens, but nothing more than that. The whitepaper does go into detail about the software, but to this reviewer’s technical understanding, nothing in the documentation or online discloses any relevant information.

Use of Blockchain Roadmap

Whitepaper

4.0
Whitepaper
Comprehensiveness

Does it cover the full scope of the problem and solution?

4.0
N/A
4 - Satisfactory coverage, well written.
Readability

Is it easy enough to understand?

5.0
N/A
5 - Crystal clear. Enjoyable.
Transparency

Does it candidly describe and disclose where the project now stands, how much exists and how much still needs to be done, etc.?

4.0
N/A
4 - Informative disclosure.
Business Plan Presentation

Does it contain a viable, comprehensive business plan?

4.0
N/A
4 - Clear, well thought out, realistic.
Technology Presentation

Does it present a well thought out technological architecture? Does it address implementational challenges?

3.0
N/A
3 - More information required.

Whitepaper

At 27 pages long, the whitepaper, for starters, was not easy to come by. It takes a few google searches to come by the proper, full whitepaper, with its playful cousin – the small, one page overview document – much more accessible. However, it is thorough, readable and deep. It delves into the background of why the tZERO token is needed in their eyes, tZERO’s products, techonlogy platforms, business model, use of proceeds, the team and advisory board, the overall vision and even some technicalities for the more tech-minded investors and enthusiasts. It is plain – no crazy infographics or flow charts – yet thorough, and it mainly delivers what a good whitepaper should deliver – all the relevant specifics without getting too technical. What it does lack, however, is any blockchain information – which blockchain, what are the reasons and how tZERO are planning to integrate their products in that way.

Whitepaper Compliance

Roadmap

1.6
Roadmap
Concreteness

Is there a concrete and practical development plan (vs. just a conceptual vision)?

1.0
N/A
1 - No concrete plans or milestones.
Feasibility

Is the development plan realistic? Is it based on reasonable goals and timelines?

1.0
N/A
1 - A pipe dream.
Vision

Is there a larger, long-term vision?

2.0
N/A
2 - Riding the current wave.
Dependencies (services or capabilities)

How available, operational, or trusted are the other systems or capabilities on which the project relies?

1.0
N/A
1 - Not-yet-available or questionable.
Current Position

Where is the project now, relative to its vision and plans?

3.0
N/A
3 - Getting there.

Roadmap

Unfortunately, there is no roadmap to be found. Anywhere. The only indications about future plans are what is mentioned under the Token Sale section of this review, with regards to token allocation and use of proceeds, and the other indications are under the Product section, detailing upcoming projects tZERO is aiming to launch sometime this year.

Roadmap Company and Team

Compliance

3.6
Compliance
Token Utility (value through usage)

How much use is there for the token itself (regardless of its value as an investment vehicle)?

1.0
N/A
1 - None in the near (or any) future.
Token as Security (tradable instrument)

How valuable is the token as an investment vehicle or financial instrument?

5.0
N/A
5 - Only through utility value, or airtight compliance.
Token/Smart-Contract Readiness

Is the blockchain infrastructure of the project ready for use? Is there a working prototype or MVP? How long until it is operational?

2.0
N/A
2 - Proof of concept or test platform.
Attention to Compliance Issues

How much attention is given to compliance (via token and ecosystem design, token sale participation, etc.)? Is this issue addressed directly and coherently?

5.0
N/A
5 - Professional, audited.
Legal Review/Risk Assessment

What kind of legal documentation (reviews or agreements) and risk assessment are provided?

5.0
N/A
5 - Professional and top-tier.

Compliance

The tZERO token is the first preferred stock security token, and tZERO is being issued in accordance with U.S. federal and state securities laws. This token will be offered as a security to qualified investors will pay 10% of the adjusted gross revenues to token holders on a quarterly basis. Right now, the tZERO token doesn’t have any utility and exists solely as a security token, but tZERO has admitted to consider the option of providing certain additional benefits to holders of the token in the future, although there hasn’t been any discussion as to what those benfits might be.

The goal of the tZERO security token offering is to raise capital to support tZERO’s business, which includes the future development of the tZERO security token and a security token trading system, the development of certain functional utility benefits that, while not a part of the tZERO security token, may be offered to holders of tZERO tokens, lobbying for important legal and regulatory changes, and general coporate purposes. The token offering seeks to improve upon the traditional utility token ICO by addressing some of the shorcomings and regulatory issues surround such ICOs. Mainly, the tZERO token is intended to afford token holders the benefits of a traditional security, while maintaining the flexibility to provide discretionary practical benefits to holders of tZERO tokens.

Compliance Token Sale

Company and Team

4.6
Company and Team
Company Stage and Foundation

Is the company already established? Has it raised funds before? Is it mature?

5.0
N/A
5 - Well established, has raised significant funds.
Background of Lead Team Members

Do we know who they are? Do they have LinkedIn profiles? Do they have solid, relevant backgrounds?

5.0
N/A
5 - Accomplished, recognized.
Team Assembly and Commitment

Is a solid, fully committed core team in place? Do they have online (e.g. LinkedIn) profiles showing sufficient relevant experience? Is their participation transparent?

4.0
N/A
4 - Fully assembled and committed.
Team Skill Set Relevance

Does the amount of talent and skill in each area seem to fit the project requirements?

5.0
N/A
5 - Meeting and exceeding project requirements.
Team Skill Set Balance

Is the team well-rounded (biz/tech/blockchain)? Is there sufficient talent and skill in all areas of required development?

4.0
N/A
4 - Good, sufficient for each aspect.

Company and Team

The team behind TZero is quite solid. CEO and founder, Patrick Byrne is regarded as sort of a pioneer in adopting cryptocurrency, and one can point to Overstock as reference of his ability to build a NASDAQ listed company with revenues of $1.8 billion in 2016. In 2012, Byrne’s challenged Overstock to become the first online retailer to accept bitcoin for payments. In 2016 Overstock was the first company ever to issues shares of a public company on an ATS. Outside of Bryne, President Joe Cammarata has a strong history pioneering NASDAQ market orders for Datek, and sold Sonic Trading to the Bank of America for just under $1.4 billion. Cammarata is also the current CEO for SpeedRoute, a large scale financial technology service providers. General Counsel and COO Ralph Daiuto Jr. has a strong background, managing several broker-dealers and innovative technology companies and overseeing their daily operation, including legal, compliance, and regulatory matters. Across the board the team is built around successful businessmen and entrepreneurs, and the team looks packed with relevant and experienced personnel. The brokerage team consists of 15 members with Series 4, 7, 24, 27, 57, 62, 63, 66 and 99 licenses.

In the same fashion, the advisory board is also solid and relevant, centred around blockchain technology. This includes a co-founder of Ethereum and CEO and founder of Decentral and Jaxx, Aanthony Di Iorio; Brock Pierce Co-Founder, Co-founder for Block.one and Blockchain Capital and Chairman for the Bitcoin Foundation; Steven Nerayoff who advised for Ethereum, Lisk and Bancor and other, relevant, publicly-known figures.

Both the team and the advisory team is packed and filled with relevant, experienced and strong figures in the industry, which is a great sign of a thought out plan.
The team information can be found in the relevant documents and in tZERO’s website, as well as supplementary online searches to provide more information.

Company and Team Product

Token Sale

3.2
Token Sale
Raise Amount Max

Is there a clear cap? Is the maximum raise amount modestly sufficient (as opposed to either greedy or insufficient)?

3.0
N/A
3 - Justifiable.
Raise Amount Min

Is the minimum raise reasonable considering the development plan? Are there raise-amount dependent milestones?

3.0
N/A
3 - Justifiable.
Fund Allocation

Is fund distribution and allocation reasonable and justified?

2.0
N/A
2 - Use of funds only loosely defined.
Token Allocation

Is the ratio of tokens sold to those kept reasonable? Does it prevent the company from having too much control?

4.0
N/A
4 - Most tokens sold, vesting periods on kept tokens.
Media Presence and Following

Is the sale being talked about in Reddit, Bitcointalk, Social Media, Medium, etc.? Is information available and accessible? Is there interest?

4.0
N/A
4 - Solid exposure and interest, good impression.

Token Sale

tZERO launched their ICO on December 18th of 2017, attracting over 10,000 registrations for accreditation verification, a requirement to subscribe to participate in the ICO. The token sale raised over $100 million USD in a mere 12 hours. It has raised close to $250 million USD since then. However, the company has released a confirmation tha the sale has been under review by the SEC since February. The Wall Street Journal released a report, 25 pages long, that confirmed the SEC is conducting a sweeping probe of companies and firms that have sought to raise money via ICOs, and Overstock.com was in their crosshairs. The president of tZERO, Cammarata, responded that the team is glad the SEC is ‘scrutinizing the space’ as he told CoinDesk at the beginning of March. After raising $100 million USD in the pre-sale alone, Cammarata also commented on switching from SaftLaunch, a platform for managing crypto token sales, to StartEngine, a platform first developed for equity crowdfunding management. According to Cammarata, tZero’s decision to switch platforms was not due to regulatory issues, but stems from SaftLaunch’s complicated and time-consuming anti-money laundering (AML) and know your customer (KYC) process, which resulted in a bottleneck as the ICO attracted huge interest. As such, the presale of tZero’s tokens was extended. There is also some criticism as to whether the numbers are inflated or not; SeekingAlpha released a report stating that The latest filings indicate that only $49 million out of the $250 million offering amount has been sold. Moreover, they have raised concerns Overstock might be purchasing ICO tokens itself. Cammarata discounted those suggestions, however, telling CoinDesk that ’70 percent of the ICO’s investors have come from family offices, hedge funds and the people who run those institutions, with the other 30 percent coming from non-institutional investors.’ There are still heated debates till this day, and the company hasn’t provided any proofs on their end except for $38 million USD accounted for, raised in cash.

The tZERO token will pay 10% of adjusted gross revenue to token holders on a quarterly basis, subject to board approval and the conditions precedent (or substitute requirements)
outlined in the offering memorandum.
Only token holders who lock up their tokens are eligible for dividends, which promotes price stability.

23% of the tokens will go to the company and 77% were/are sold to investors. The proceeds, according to the company, will go towards:

1) The future development of the token and the token trading system
2) Strategic acquisition and investments
3) Development of functional utility features for token holders
4) Legal expenses
5) Augmenting techonlogy, infrastructure and personnel
6) Lobbying lawmakers and regulatory authorities related to blockchain technology and regulation
7) Global expansions of products and services.

As one can see, the allocation of token sale proceeds is not specified, rather a framework for general uses is provided.

The total cap for the ICO is $250 million USD.

Product

Digital Locate Receipt (DLR) Software

At the moment, a great deal of stock loan transactions are performed world wise using non-automated systems. This practice has some inherent issues – manpower, inefficiency and also the potential for the lending of a stock that is not actually owned by, or accessible to, the lender. In this context, it is possible that some entities will over-lend stock, causing naked short selling to occur. (The practice of short-selling a tradable asset of any kind without first borrowing the security/asset or ensuring that the security/asset can be borrowed)

tZERO’s DLR suite allows broker-dealer licensees with stock inventory to both load and manage their inventory via a front end system; they can provide locates to their clients who wish to short-sell stock or loan the stock to their clients who wish to borrow the stock. The suite also allows for the storage of information immutably to a proprietary or other blockchain.

SpeedRoute Execution Services

SpeedRoute, an electronic agency brokerage firm that executes U.S equities for broker-dealer clients, offers low latency, smart order routing solutions to access liquidity at every U.S. equity exchange and dozens of additional market centers.

Blue Ocean

Blue Ocean is an overnight trading platform for U.S. equities. U.S. equities markets are non-operation between certain hours (Usually 8:00PM EST to 4:00 AM EST) and thus tZERO is looking to address this market ‘inefficiceny’ as they call it by operating its ATS between these hours. This will allow customers and traders to maange overnight risk, and seek profitable trading opportunites that were not available to them prior.

tZERO are also planning to launch additional services. Robo Advising is expected to launch sometime during 2018 and is supposed to offer automated protfolio management compiled by a team of experts. tZERO also has signed a letter of intent with Siebert Financial Corp. to offer discounted online trading of U.S. equities to customers through Muriel Siebert & Co. and Overstock relationship.

Overall, tZERO’s products are very well catered to traders, brokers, and investors.

Category Breakdown
Readiness

Is the product ready for use? Is there a working prototype or MVP? How long until it is operational?

4.0
N/A
4 - Beta or initial rollout.
Appeal

How appealing is the product? How good or necessary is it? Does it have a distinct edge?

3.0
N/A
3 - Interesting.
Target User Base

Is it mass market or niche?

3.0
N/A
3 - Has growth potential.
Competition

Are there many other similar solutions or is this one of just a few, or even one of a kind?

3.0
N/A
3 - Some normal competition.
Innovation

How innovative or inventive is the product, either conceptually or technologically?

3.0
N/A
3 - Partial, a novel approach or aspect.
Product Score:
3.2

Use of Blockchain

There isn’t much information available online as to what exactly is done with blockchain technology in regards to tZERO’s products. The only information available is that the tokens are ERC-20 tokens, but nothing more than that. The whitepaper does go into detail about the software, but to this reviewer’s technical understanding, nothing in the documentation or online discloses any relevant information.

Category Breakdown
Blockchain Development

Is blockchain technology essential? Does it make the solution significantly different and better?

1.0
N/A
1 - None; simple Ethereum based coin.
Disruptive Blockchain Advantage

How disruptive is the introduction of blockchain technology into the product's market space?

1.0
N/A
1 - None or indeterminate.
Need for a Custom Token (vs. BTC or ETH)

Is the token essential or could it be done just as well or better with fiat or Bitcoin?

5.0
N/A
5 - Real, tangible, utility-based value.
System Decentralization (besides token)

How decentralized is the system architecture other than the token (e.g., data collection, storage, access, and use, or decision making processes, etc.)?

1.0
N/A
1 - Essentially centralized.
Contribution to Blockchain Ecosystem

How compelling is the solution's contribution to the evolution of blockchain infrastructure and economy?

2.0
N/A
2 - Meh, okay.
Use of Blockchain Score:
2.0

Whitepaper

At 27 pages long, the whitepaper, for starters, was not easy to come by. It takes a few google searches to come by the proper, full whitepaper, with its playful cousin – the small, one page overview document – much more accessible. However, it is thorough, readable and deep. It delves into the background of why the tZERO token is needed in their eyes, tZERO’s products, techonlogy platforms, business model, use of proceeds, the team and advisory board, the overall vision and even some technicalities for the more tech-minded investors and enthusiasts. It is plain – no crazy infographics or flow charts – yet thorough, and it mainly delivers what a good whitepaper should deliver – all the relevant specifics without getting too technical. What it does lack, however, is any blockchain information – which blockchain, what are the reasons and how tZERO are planning to integrate their products in that way.

Category Breakdown
Comprehensiveness

Does it cover the full scope of the problem and solution?

4.0
N/A
4 - Satisfactory coverage, well written.
Readability

Is it easy enough to understand?

5.0
N/A
5 - Crystal clear. Enjoyable.
Transparency

Does it candidly describe and disclose where the project now stands, how much exists and how much still needs to be done, etc.?

4.0
N/A
4 - Informative disclosure.
Business Plan Presentation

Does it contain a viable, comprehensive business plan?

4.0
N/A
4 - Clear, well thought out, realistic.
Technology Presentation

Does it present a well thought out technological architecture? Does it address implementational challenges?

3.0
N/A
3 - More information required.
Whitepaper Score:
4.0

Roadmap

Unfortunately, there is no roadmap to be found. Anywhere. The only indications about future plans are what is mentioned under the Token Sale section of this review, with regards to token allocation and use of proceeds, and the other indications are under the Product section, detailing upcoming projects tZERO is aiming to launch sometime this year.

Category Breakdown
Concreteness

Is there a concrete and practical development plan (vs. just a conceptual vision)?

1.0
N/A
1 - No concrete plans or milestones.
Feasibility

Is the development plan realistic? Is it based on reasonable goals and timelines?

1.0
N/A
1 - A pipe dream.
Vision

Is there a larger, long-term vision?

2.0
N/A
2 - Riding the current wave.
Dependencies (services or capabilities)

How available, operational, or trusted are the other systems or capabilities on which the project relies?

1.0
N/A
1 - Not-yet-available or questionable.
Current Position

Where is the project now, relative to its vision and plans?

3.0
N/A
3 - Getting there.
Roadmap Score:
1.6

Compliance

The tZERO token is the first preferred stock security token, and tZERO is being issued in accordance with U.S. federal and state securities laws. This token will be offered as a security to qualified investors will pay 10% of the adjusted gross revenues to token holders on a quarterly basis. Right now, the tZERO token doesn’t have any utility and exists solely as a security token, but tZERO has admitted to consider the option of providing certain additional benefits to holders of the token in the future, although there hasn’t been any discussion as to what those benfits might be.

The goal of the tZERO security token offering is to raise capital to support tZERO’s business, which includes the future development of the tZERO security token and a security token trading system, the development of certain functional utility benefits that, while not a part of the tZERO security token, may be offered to holders of tZERO tokens, lobbying for important legal and regulatory changes, and general coporate purposes. The token offering seeks to improve upon the traditional utility token ICO by addressing some of the shorcomings and regulatory issues surround such ICOs. Mainly, the tZERO token is intended to afford token holders the benefits of a traditional security, while maintaining the flexibility to provide discretionary practical benefits to holders of tZERO tokens.

Category Breakdown
Token Utility (value through usage)

How much use is there for the token itself (regardless of its value as an investment vehicle)?

1.0
N/A
1 - None in the near (or any) future.
Token as Security (tradable instrument)

How valuable is the token as an investment vehicle or financial instrument?

5.0
N/A
5 - Only through utility value, or airtight compliance.
Token/Smart-Contract Readiness

Is the blockchain infrastructure of the project ready for use? Is there a working prototype or MVP? How long until it is operational?

2.0
N/A
2 - Proof of concept or test platform.
Attention to Compliance Issues

How much attention is given to compliance (via token and ecosystem design, token sale participation, etc.)? Is this issue addressed directly and coherently?

5.0
N/A
5 - Professional, audited.
Legal Review/Risk Assessment

What kind of legal documentation (reviews or agreements) and risk assessment are provided?

5.0
N/A
5 - Professional and top-tier.
Compliance Score:
3.6

Company and Team

The team behind TZero is quite solid. CEO and founder, Patrick Byrne is regarded as sort of a pioneer in adopting cryptocurrency, and one can point to Overstock as reference of his ability to build a NASDAQ listed company with revenues of $1.8 billion in 2016. In 2012, Byrne’s challenged Overstock to become the first online retailer to accept bitcoin for payments. In 2016 Overstock was the first company ever to issues shares of a public company on an ATS. Outside of Bryne, President Joe Cammarata has a strong history pioneering NASDAQ market orders for Datek, and sold Sonic Trading to the Bank of America for just under $1.4 billion. Cammarata is also the current CEO for SpeedRoute, a large scale financial technology service providers. General Counsel and COO Ralph Daiuto Jr. has a strong background, managing several broker-dealers and innovative technology companies and overseeing their daily operation, including legal, compliance, and regulatory matters. Across the board the team is built around successful businessmen and entrepreneurs, and the team looks packed with relevant and experienced personnel. The brokerage team consists of 15 members with Series 4, 7, 24, 27, 57, 62, 63, 66 and 99 licenses.

In the same fashion, the advisory board is also solid and relevant, centred around blockchain technology. This includes a co-founder of Ethereum and CEO and founder of Decentral and Jaxx, Aanthony Di Iorio; Brock Pierce Co-Founder, Co-founder for Block.one and Blockchain Capital and Chairman for the Bitcoin Foundation; Steven Nerayoff who advised for Ethereum, Lisk and Bancor and other, relevant, publicly-known figures.

Both the team and the advisory team is packed and filled with relevant, experienced and strong figures in the industry, which is a great sign of a thought out plan.
The team information can be found in the relevant documents and in tZERO’s website, as well as supplementary online searches to provide more information.

Category Breakdown
Company Stage and Foundation

Is the company already established? Has it raised funds before? Is it mature?

5.0
N/A
5 - Well established, has raised significant funds.
Background of Lead Team Members

Do we know who they are? Do they have LinkedIn profiles? Do they have solid, relevant backgrounds?

5.0
N/A
5 - Accomplished, recognized.
Team Assembly and Commitment

Is a solid, fully committed core team in place? Do they have online (e.g. LinkedIn) profiles showing sufficient relevant experience? Is their participation transparent?

4.0
N/A
4 - Fully assembled and committed.
Team Skill Set Relevance

Does the amount of talent and skill in each area seem to fit the project requirements?

5.0
N/A
5 - Meeting and exceeding project requirements.
Team Skill Set Balance

Is the team well-rounded (biz/tech/blockchain)? Is there sufficient talent and skill in all areas of required development?

4.0
N/A
4 - Good, sufficient for each aspect.
Company and Team Score:
4.6

Token Sale

tZERO launched their ICO on December 18th of 2017, attracting over 10,000 registrations for accreditation verification, a requirement to subscribe to participate in the ICO. The token sale raised over $100 million USD in a mere 12 hours. It has raised close to $250 million USD since then. However, the company has released a confirmation tha the sale has been under review by the SEC since February. The Wall Street Journal released a report, 25 pages long, that confirmed the SEC is conducting a sweeping probe of companies and firms that have sought to raise money via ICOs, and Overstock.com was in their crosshairs. The president of tZERO, Cammarata, responded that the team is glad the SEC is ‘scrutinizing the space’ as he told CoinDesk at the beginning of March. After raising $100 million USD in the pre-sale alone, Cammarata also commented on switching from SaftLaunch, a platform for managing crypto token sales, to StartEngine, a platform first developed for equity crowdfunding management. According to Cammarata, tZero’s decision to switch platforms was not due to regulatory issues, but stems from SaftLaunch’s complicated and time-consuming anti-money laundering (AML) and know your customer (KYC) process, which resulted in a bottleneck as the ICO attracted huge interest. As such, the presale of tZero’s tokens was extended. There is also some criticism as to whether the numbers are inflated or not; SeekingAlpha released a report stating that The latest filings indicate that only $49 million out of the $250 million offering amount has been sold. Moreover, they have raised concerns Overstock might be purchasing ICO tokens itself. Cammarata discounted those suggestions, however, telling CoinDesk that ’70 percent of the ICO’s investors have come from family offices, hedge funds and the people who run those institutions, with the other 30 percent coming from non-institutional investors.’ There are still heated debates till this day, and the company hasn’t provided any proofs on their end except for $38 million USD accounted for, raised in cash.

The tZERO token will pay 10% of adjusted gross revenue to token holders on a quarterly basis, subject to board approval and the conditions precedent (or substitute requirements)
outlined in the offering memorandum.
Only token holders who lock up their tokens are eligible for dividends, which promotes price stability.

23% of the tokens will go to the company and 77% were/are sold to investors. The proceeds, according to the company, will go towards:

1) The future development of the token and the token trading system
2) Strategic acquisition and investments
3) Development of functional utility features for token holders
4) Legal expenses
5) Augmenting techonlogy, infrastructure and personnel
6) Lobbying lawmakers and regulatory authorities related to blockchain technology and regulation
7) Global expansions of products and services.

As one can see, the allocation of token sale proceeds is not specified, rather a framework for general uses is provided.

The total cap for the ICO is $250 million USD.

Category Breakdown
Raise Amount Max

Is there a clear cap? Is the maximum raise amount modestly sufficient (as opposed to either greedy or insufficient)?

3.0
N/A
3 - Justifiable.
Raise Amount Min

Is the minimum raise reasonable considering the development plan? Are there raise-amount dependent milestones?

3.0
N/A
3 - Justifiable.
Fund Allocation

Is fund distribution and allocation reasonable and justified?

2.0
N/A
2 - Use of funds only loosely defined.
Token Allocation

Is the ratio of tokens sold to those kept reasonable? Does it prevent the company from having too much control?

4.0
N/A
4 - Most tokens sold, vesting periods on kept tokens.
Media Presence and Following

Is the sale being talked about in Reddit, Bitcointalk, Social Media, Medium, etc.? Is information available and accessible? Is there interest?

4.0
N/A
4 - Solid exposure and interest, good impression.
Token Sale Score:
3.2

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