“This month, a group of disgruntled investors hit Overstock.com and two former CEOs with a class-action suit. The lawsuit alleges that Overstock failed to disclose its losses to investors accurately and that the company pursued a flawed crypto strategy instead of focusing on the original business model. The news showcases the frustration felt by Overstock investors following a string of controversial headlines.
The plaintiff officially filed the lawsuit on September 27, in Utah Federal court. The putative class action lawsuit – Benjamin Ha v. Overstock.com, Gregory Iverson, and Patrick Byrne names two counts of federal securities fraud.
The plaintiff claims that Overstock purposely followed a punitive short squeeze strategy which prevented investors from delivering their shares before a six-month lock-up period transpired. He argues that the new tokenized shares prevented short sellers from operating altogether.
Flawed Crypto Strategy
Additionally, the plaintiff claims this was the intention of the product from the beginning. He alleges that Overstock did not register these securities with the SEC. Also, investors were not properly informed about the risk level associated with the crypto project before its undertaking.
According to the complaint, Overstock.com did little to prevent losses over the last two years. The plaintiff alleges that Overstock’s ex-CEO abandoned the company to pursue his crypto operations. The paper cites the fact that Byrne was on the road 220 days over the last year promoting crypto projects such as tZERO, instead of preventing huge Overstock losses.
Bizarre CEO Statements
Another point mentioned in the lawsuit is “bizarre CEO statements.” These investors believe that Byrne’s recent statements drove the price of shares down considerably. Last month, Byrne made headlines after revelations that he had been having an affair with an alleged Russian spy named Maria Butina made national headlines.
Following the headlines, Byrne made a series of odd public statements that caused investors to lose faith in his abilities to run the company. The statements came via Overstock.com press releases and caused the price of stocks to shutter.
In the statements, Byrne discusses helping the “Men in Black” multiple times in his life. The ex-CEO claimed the first time was after someone murdered his friend. The second time was to “shake up wall street.” In the strange conversation, he described how he thought that this was the MiB for the third time, only to find out it was a political agenda. Aside from the oddness of the release, the fact that Overstock published it didn’t help investors.
SEC Stepped in – But to Late
In the lawsuit, the plaintiff explains that the SEC interceded to stop the sale of Byrnes unregistered tokenized shares, but too late. In total, Byrne sold $102 million of his private shares. Additionally, the company sold shares and took the profits to further its crypto strategy.
More Bad News for Overstock Investors
It’s been a bumpy ride for Overstock investors over this last year. The company has already had two CEOs resign in the last two months. Now investors want accountability for their losses. It will be interesting to see how this lawsuit affects Overstock.com’s future crypto aspirations.
- Mallorca Blockchain Days brings the Bitcoin and Blockchain community in Palma de Mallorca together
- “Dual Citizenship, Citizenship through Investment and Global Citizenship” Conference will take place in Istanbul for the first time
- EQUA Start, CPUcoin and Craft Beer Coin Take Home Top Honors at BitAngels Pitch Day
- Sixth Annual CoinAgenda Global Adds Industry Titans and Enterprise Leaders to Speaker Lineup
- Discover the Decentralization with the Experts in the Largest Crypto Owning Country-TURKEY