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TZero to Sunset tZero Crypto App Amid Regulatory Challenges
Customers will have until March 6 to withdraw their assets from the platform.
Updated May 9, 2023, 4:07 a.m. Published Feb 3, 2023, 8:31 p.m.
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Overstock-owned trading platform tZero will sunset its tZero Crypto app, which combines a digital wallet with exchange services, on March 6, the company tweeted Friday morning.
The app’s discontinuation comes as the firm struggles to build its business while regulators "clarify the regulatory environment surrounding crypto," according to tZero's tweets. It also comes roughly one year after the Securities and Exchange Commission (SEC) ordered the company to pay $800,000 for violating federal disclosure rules. Users will have to withdraw their assets from the app before tZero Crypto's shutdown on March 6. Until then, the platform's custodian will continue to custody customers' crypto.
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TZero Crypto was launched in 2019 with the idea of creating the first platform where customers could trade cryptocurrencies, blockchain-based securities and traditional stocks with a single app, pending regulatory approval. But those aspirations were complicated by the firm’s run-ins with regulators and other controversies.
In January of last year, the company paid $800,000 to settle an SEC order that alleged the firm neglected to properly disclose that it had shared order information with both a broker-dealer affiliate and Blue Ocean Technologies, a trading partner in Singapore it acquired at a later date. Regulators also issued a cease-and-desist order as part of the settlement.
Before the settlement, the firm had already had its fair share of problems due to scandals within its parent company’s executive suite. In August 2019, Overstock CEO Patrick Byrne stepped down from his position as head of the company over allegations that he had become entangled with a Russian spy.
In his resignation letter, Byrnes wrote that he did not want his ties with the Russians to overshadow the company’s ventures, especially its foray into blockchain-based technology and the crypto space.
The latest decision to shutter the tZero Crypto app may not signal the end of tZero’s ambitions to offer digital asset securities to its clients, however.
“Our regulated affiliates will be playing a key part in bringing compliant digital asset securities to the market including crypto assets that can be lawfully offered on a regulated securities platform,” tZero tweeted.
Read More: Elizabeth Warren Praises SEC Chief Gensler, Slams Crypto Lobby
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