Overstock, an online retailer known for being the first to accept Bitcoin, has sought the dismissal of a lawsuit accusing the company of misrepresenting the nature of its ‚digital dividend‘.
The dividend is an OSTKO value token to be distributed to the company’s shareholders for every ten shares of Overstock.
The news of the dividend led to an increase in the share price and the lead plaintiff accuses Overstock of deliberately withholding all information about the distribution of the dividend and of having misled the market to intentionally punish short sellers.
The distribution of Overstock’s digital dividend is scheduled for May 19.
Overstock will give millions of tokens of value to its shareholders
Overstock rejects accusations of manipulation
For its part, Overstock argues that the main plaintiff in the case, The Mangrove Partners Master Fund, is a „known short seller“, although it claims to be an institutional investor.
In its statement, Overstock states: „It cannot be argued that exchanging patient information, adequately protect the financial data, short bitcoin on monday, its existing statements, freeze its operations, may 2020 guidance paper, bitcoin halving 2020: miner perspective, founder of bitcoin, unnamed regulated partner, the healthcare setting has misrepresented the nature of the dividend, or tried to hide the impact it would have on short sellers.
„In fact, the plaintiff admits that the impact was widely known and reported from day one. This alone justifies the dismissal,“ the firm adds.
Overstock’s tZERO to launch US broker dealer in Q2 2020
Overstock is accused of market manipulation
The consolidated lawsuit also charges former Overstock CEO and founder Patrick Byrne, former CFO Gregory Iverson and current retail president David Nielson with violating securities laws amidst Byrne’s sudden departure from the company and the liquidation of 20% of his Overstock stock last year.
The plaintiff claims that Overstock made misleading year-end predictions about the profitability of its alternative trading system, tZERO, to drive up the price of OSTK shares – allowing Byrne to collect a fortune.
Overstock’s blockchain arm, tZERO, gets $5 million in capital injection
In addition to the bullish furor surrounding tZERO, the digital dividend news caused the price of OSTK to rise more than 97% during the month of September, resulting in more than $90 million in earnings for Byrne, according to demand.
Overstock later admitted that its previous year-end forecast was inaccurate, which triggered a series of declines in the price of OSTK.