George Soros, famously known as ‘the man who broke the Bank of England’, has invested in crypto-centric Overstock.com. The billionaire investor bought about 2.5 million shares of Overstock.com, an e-commerce company focused on home goods and clothes with recent forays into cryptoasset trading. The investment by Soros fund management comes in the wake of a 23.5% jump in share prices of Overstock.com after the company made public its plans to trade cryptoassets on a subsidiary platform last September (2017).
tZero — Launch of crypto trading platform
Overstock.com has been a believer in cryptoassets from the very beginning, as the company started accepting payments in Bitcoin from 2014. Patrick Byrne, the company’s CEO, is a huge fan of cryptoassets and is bullish on the future of Bitcoin and Blockchain based technologies. The company has partnered with two other firms RenGen and Argon to create an ‘alternative trading platform’ for cryptoassets. Calling it a ‘distributed ledger platform for capital markets’, the company plans to enable trading of coins distributed through Initial Coin Offerings (ICO) in a regulated environment. The platform is set to be run by tZero, a majority owned subsidiary of Overstock.com.
While Initial Coin Offerings (ICOs) have increased exponentially in number after the cryptoasset boom of 2017, a lack of regulation has deterred seasoned and institutional investors from participating in these offerings. That a large number of ICOs have proven to be duds and scams doesn’t help in any way either. While ICOs have had a rousing public reception as people vie for a share of the next potential crypto success, market regulators have been less than enthusiastic about these novel fundraising endeavours. Some countries such as China and South Korea have a blanket ban on Initial Coin Offerings while other countries such as Switzerland are bringing in regulations for ICOs. The legal status of Initial Coin Offerings in most countries is still unclear, though they are generally considered to be equivalent to securities. The launch of regulated platforms like tZero might help regulators adopt a more friendly stance towards Initial Coin Offerings.
Soros’ investment makes him the third largest shareholder in Overstock.com, with a share value of over $150 million. Overstock.com has had a phenomenal 2017, with an impressive rise of over 200% in share prices. Soros had earlier commented on cryptoassets and the Blockchain at the World Economic Forum (WEF) this January. While Soros believes that Blockchain is a useful technology that could be put to productive use, he has also put down cryptoassets as ‘typical bubbles’.
Soros’ fund management — Other investments
In other investments, Soros’ fund management firm has invested in Snap, buying around 150 thousand shares of the social media company. The firm has also bought 71500 shares in Netflix and 15700 shares in Twitter while dumping shares in Facebook after Soros called it a menace. Though Soros has been critical of Google, his management firm has bought 1600 more shares, taking his total holdings to 4600 shares.
Following a mega rally in cryptoasset prices through 2017 spearheaded by Bitcoin, cryptoassets have entered popular discourse and have captured the fancy of a class of investors. Thousands of Initial Coin Offerings were launched as investors lapped up any and every fundraiser associated with cryptoassets. After a series of frauds, the frenzy surrounding cryptoassets has deflated. Yet, still, companies reap windfall profits after announcements related to cryptoassets or just attaching the term ‘Blockchain’ to their names with massive upticks in share prices. This has prompted the SEC (Securities and Exchange Commission) to warn companies of increased scrutiny if they incorporate the term ‘Blockchain’ to their names without undertaking any activity sufficient to warrant such addition.