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SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2017
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS

Security token offering

On December 18, 2017, tZERO launched an offering (the "security token offering") of the right to acquire, if issued by tZERO in the future, tZERO Preferred Equity Tokens (the "tZERO Security Token") through a Simple Agreement for Future Equity ("SAFE"). The security token offering is expected to run through May 14, 2018 but may be extended or shortened and is subject to withdrawal rights under certain circumstances. As of March 14, 2018, tZERO has received $91.4 million in proceeds, net of requested withdrawals.

tZERO issuance of equity awards

In December 2017, tZERO’s Board of Directors approved an equity incentive plan for tZERO pursuant to which it may grant compensatory options to acquire up to 5% of tZERO’s common stock. In January 2018, tZERO granted restricted stock units under the equity incentive plan for an aggregate of approximately 1.0% of tZERO’s common stock, net of shares withheld to satisfy minimum tax withholdings, all of which vested on January 23, 2018. In January 2018, tZERO recognized $4.0 million in compensation expense associated with these awards based on their estimated fair value at the grant date. As a result of these vested awards, our ownership interest in tZERO will be reduced from 81% to 80%.

Collaboration with Hernando de Soto

In January 2018, we jointly formed DeSoto Inc. (“DeSoto”), which is a public benefit corporation that will carry out our collaboration efforts with economist Hernando de Soto. DeSoto intends to build systems using blockchain, social media, artificial intelligence, and mobile apps to help develop more effective records of ownership in developing countries. DeSoto is owned 50% by Medici Ventures, 33% by Mr. de Soto, and 17% by our Chief Executive Officer, Patrick Byrne. During the first quarter of 2018, we have contributed $10.0 million to help launch the project and expect to contribute an additional $4.0 million before the end of the first quarter of 2018. Dr. Byrne personally plans to contribute $14.0 million to help launch the project, and he will receive a 17% ownership interest in DeSoto. Mr. de Soto will serve as Chairman of DeSoto and as a director of Medici Ventures, and Dr. Byrne will serve as Co-Chairman and Chief Executive Officer of DeSoto, in addition to his positions with Overstock and Medici Ventures.
 
StockCross Financial Services, Inc., Siebert Financial Corp. and Kennedy Cabot Acquisition, LLC
On January 31, 2018, tZERO entered into a Common Stock Purchase Agreement by and among the Company, certain holders of common stock of Siebert Financial Corp. (“Siebert”) and StockCross Financial Services, Inc. (“StockCross”), an affiliate of Siebert, pursuant to which tZERO received 1,476,600 shares of StockCross common stock, or 24% of the total outstanding shares, and 1,217,295 shares of Siebert common stock, or 4.5% of the total outstanding shares, for an aggregate purchase price of $12.0 million. On the same day, tZERO entered into a Securities Purchase Agreement with Kennedy Cabot Acquisition (“Kennedy”), the majority shareholder of Siebert, pursuant to which tZERO received 100 member units of Kennedy, or 1% of the total outstanding member units, and 70,000 shares of Siebert common stock, or 0.3% of the total outstanding shares, for an aggregate purchase price of $1.0 million. Siebert is a public holding company that, among other things, conducts a retail discount brokerage business through its wholly-owned subsidiary, Muriel Siebert & Co., Inc. (“Muriel Siebert & Co.”). All of the shares and interests purchased are subject to legal and/or contractual restrictions on transfer and, under certain circumstances, a right of StockCross to repurchase the 24% interest in StockCross and 1,217,295 shares of Siebert at tZERO’s purchase price.

On February 16, 2018, Siebert distributed an additional 90,000 shares to tZERO. Following this distribution, tZERO holds approximately 5.1% of the total outstanding shares of Siebert common stock.

In conjunction with the above agreements, tZERO also signed a Financial Services Advertising Agreement by and among tZERO, SpeedRoute and Muriel Siebert & Co. to offer discounted online trading of U.S. equities to customers accessing Muriel Siebert & Co. through the Overstock.com website’s FinanceHub.

Verify Investors, LLC
On February 12, 2018, tZERO entered into a purchase agreement by and among tZERO, Verify Investor, LLC and Jor L. Law, as representative of the several sellers of membership interests in Verify Investor, LLC, in which tZERO purchased 81.0% of Verify Investor, LLC, an accredited investor verification company, for $12.0 million in cash.

ES Capital Advisors, LLC
On January 31, 2018, tZERO entered into a stock purchase agreement by and among the Company, David J. Morton (“Morton”) and PLG Consulting pursuant to which tZERO purchased an additional 2,250 membership units of ES Capital Advisors, LLC, (“ES Capital”), a registered investment advisor under the Investment Advisers Act of 1940, from each of PLG Consulting and Morton, who serves as the manager of ES Capital, for an aggregate purchase price of approximately $3.0 million. Following the additional purchase, tZERO beneficial ownership in the entity will increase from 51% to 65.8% of the membership units of ES Capital. tZERO operates the ES Capital business under the name tZERO Advisors and offers automated investment advisory services through the Overstock.com website’s FinanceHub.

Weeden Prime Services, LLC

On February 6, 2018, tZERO entered into a Letter of Intent (the "WPS LOI") with Weeden Prime Services, LLC ("WPS"), a U.S. registered broker-dealer. The WPS LOI contemplates that tZERO will acquire 51% of the outstanding membership interests of WPS for $11.0 million in cash with a subsequent purchase, prior to the first anniversary of the initial purchase, of an additional 30% of the aggregate membership interests of WPS for an additional $7.0 million in cash. Following the subsequent purchase, tZERO will own 81% of the then-outstanding membership units of WPS. The WPS LOI contemplates that the existing members of WPS shall retain certain minority investor rights, including with respect to representation on the board of managers of WPS (proportionate to ownership) and customary drag-along and tag-along rights and anti-dilution protections. The WPS LOI also contemplates that at any time following the first anniversary of the second closing, tZERO may, with 60-days' written notice, acquire all (but not less than all) of the outstanding membership units of WPS not then owned by tZERO at fair market value. tZERO expects the transaction to close during the third quarter of 2018, subject to the execution of definitive documentation, any applicable regulatory approvals and customary closing conditions.

Other matters regarding tZERO

On January 16, 2018, tZERO announced its intent to provide advisory services to WENN Digital ("WENN") in connection with its previously announced KodakCoin Security Token (the "KodakCoin") offering which was initially expected to launch in the first quarter of 2018. To date, tZERO has not provided advisory services to WENN with respect to KodakCoin, and there can be no assurance that tZERO will do so.