In an investor call on Monday with shareholders, Overstock Interim CEO Jonathan Johnson provided an update on the status of Makara Capital's potential investment tZERO, the firm's security token exchange. According to Johnson, Makara has informed Overstock that "it will not be investing in tZERO right now, but it remains excited about what tZERO is building and we will revisit it investments decision as tZERO progresses."
In March, Overstock announced a potential $101 million equity investment from Makara Capital and GSR Capital which was set to close in April. The firm provided an update in April stating that it was still negotiating the details of the investment adding that it "is not under any exclusivity with Makara or GSR and has retained advisors to pursue parallel alternatives."
Overstock's longtime CEO and founder Patrick M. Byrne stepped down last week citing his comments on "government matters" as one of his reasons for departure. In the investor call, Johnson states that "Patrick's departure last week was a positive comment on the strength of the team and the business," and that he "would not have left had he not believed the business he spent two decades starting and building residents strong and in good hands." Johnson also reiterates Overstock's commitment in blockchain adding that "our shareholders and others can rest assure that we will continue to nurture and grow our block chain team in the business – and the businesses currently in the Medici Ventures family..."
Regarding the recent news regarding the SEC's investigation into tZERO and its potential security token sale, E. Glen Nickle, Overstock's General Counsel, states "we continue to cooperate with the SEC. tZERO, I think has unprecedented regular calls with the SEC meeting with them weekly. The SEC is committed to let us know what its focus is. That investigation I think is going well and we'll continue to work to resolve it as quickly as possible."
Overstock shares are down nearly 10% shortly after the publication of the news.