Overstock, tZERO Eyeing Largest ICO Yet

The Overstock.com subsidiary, tZERO, is planning to launch an initial coin offering (ICO), according to news from CNBC. The company wants to raise up to $500 million through sales of the new digital currency.

Overstock.com is one of the most significant investors in the blockchain technology on which digital coins are based. The site accepts bitcoin as a form of payment and ranks among Google, Citi and Goldman Sachs as some of the major players in the cryptocurrency space.

If the company meets its $500 million goal, it will be the largest ICO in history. The previous record was set by Filecoin, with a $262 million offering in September.

“While many doubted, the tZERO team worked hard to be at the tip of the spear in creating and launching credible, capable and institutionally scalable blockchain technologies for crypto assets,” said Overstock CEO Patrick Byrne in a press release. “Today those efforts are attracting interest from both the crypto community and the largest global institutional funds.”

Initial coin offerings, while increasingly popular, are controversial, CNBC said. The U.S. Securities and Exchange Commission released an investor bulletin this summer that warned about the risks of such an investment. China banned ICOs in September. Some ICOs are poorly developed: They have been hacked or have clogged the Ethereum network, driving down the price of the cryptocurrency Ethereum.

In 2014, Overstock launched Medici Ventures, which manages the online retailer’s work in blockchain, and has majority ownership of tZERO. Medici reported a loss of $3.3 million during Q2, $400,000 more than Q2 2016.

“It’s going to be a loss until it takes off,” said short-seller Marc Cohodes, undeterred by Medici’s current unprofitability. “You’re not paying anything for blockchain, and you’re getting retail at a steep discount, [and] I think the stock’s going to go to $100.”

For several weeks, Overstock.com’s stock has been volatile. With the online retailer announcing plans to develop a digital coin trading platform, investors have glommed onto the stock in order to profit from blockchain technologies.