Overstock Sells $5m Cryptobond to FNY Managed Accounts, a New York-based trading firm


Overstock Sells $5m Cryptobond to FNY Managed Accounts, a New York-based trading firm

Earlier the last year, ForexMinute had reported on the decision by Overstock, the giant retail company, that it was accepting Bitcoin payments. Later on the company developed special affection for the digital currency and announced that it was going to issue cryptobond. Now, it has officially been announced that it has sold $5m cryptobond to FNY Managed Accounts.

The press release posted on the NASDAQ website tells that the sale of a $5 million digital security in the form of a cryptobond to FNY Managed Accounts LLC, an affiliate of FNY Capital has been completed. The sale is intended to serve as an additional proof-of-concept of the safety and efficiency of exchanging financial instruments via a cryptographically secured, public ledger.

Overstock CEO Patrick M. Byrne was quoted saying:

In recent months the financial industry has been coming to understand the power of digital securities based on cryptotechnology and how this is going to change their world. We welcome First New York, salute the vision of the company’s leadership, and anticipate that this could be the start of a beautiful relationship between our firms.

Similar views were shared by Donald Motschwiller, CEO of First New York who said that the investment in this $5 million cryptobond reflects their commitment to be at the forefront when it comes to adopting new technologies. Nonetheless, this strategic transaction uniquely positions First New York’s proprietary front end, HYDRATrade, and Overstock’s tØ.com cryptosecurities trading platform to offer the first fully integrated CryptoTrading software suite.

Interest at 7 percent per annum over a five-year term

It has come to notice that the $5 million cryptobond Overstock has sold to First New York bears interest at 7 percent per annum over a five-year term. Though, the cryptodebt is unsecured and has no covenants, it has both put and call provisions pursuant to which Overstock expects it and First New York may unwind the bond in the fourth quarter of 2015 or sooner.

Nonetheless, along with the issue of this bond, Overstock is making a $5 million loan to First New York at 3 percent per annum with similar put and call terms. The loan comes with cross default provisions against the bond. Thus, transferring the economic risk associated with any failure of this technology back upon Overstock.

Additionally, the part of the agreement discloses that Overstock may issue identical cryptobond to other qualified institutional investors. However, it does not intend to make any similar loans to any future purchasers of any of its cryptodebt.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com