Shares in Overstock.com Inc. dropped as much as 10 percent Thursday after the company revealed that the U.S. Securities and Exchange Commission was investigating its tZERO initial coin offering.

The revelation, disclosed in an 8K filing, stated that the SEC had requested “certain documents related to the offering and the tokens” in February. The filing also noted that Overstock.com had raised $100 million in the ICO presale and that it had moved toward the public ICO offering, albeit one limited to accredited investors.

Overstock.com, which announced its tZERO token ICO in December, is aiming to raise $250 million to develop a platform that “integrates cryptographically secure distributed ledgers with existing market processes to reduce settlement time and costs, increase transparency, efficiency and auditability.” Tthe tZERO platform is designed to operate as a regulated alternative trading system that matches buyers and sellers on a real-time, authenticated, immutable blockchain ledger, with the tokens being used both to raise funds for development as well as trading on the platform itself.

There’s no suggestion that Overstock.com has done anything wrong, but the SEC investigation doesn’t come as much of a surprise. A report Wednesday claimed that the SEC has issued dozens of subpoenas and information requests to technology companies and advisers involved in the market.

Interest by the SEC in ICOs started in July when the commission ruled that ICOs tied to securities in a given company are subject to securities law, just as any share or equity offering would be. Then came an emergency asset freeze on PlexCoin Dec. 5 and a court order to shut down AriseBank Jan. 30. The tZERO ICO is offering security-based tokens, issued pursuant to a comprehensive offering memorandum as opposed to being linked to a white-paper proposal, making it appear that Overstock.com is trying to stay in compliance with securities regulations.

The news spooked the market, however. CNBC reported that shares in Overstock.com dropped as much as 10 percent during the day before settling down to close 4.4 percent lower.

Image: tZERO/screenshot