While the world of cryptocurrency is complicated in itself, it gets even more complex when the topic of securities and trading gets into the mix. There have been a lot of debates about the trading of crypto assets as the industry has been trying to get a bitcoin ETF approved for a long time and there is also a debate about what constitutes as a security which has led to Kik, a social messaging platform suing the Securities and Exchange Commission over this matter. Despite all the maturity that has taken place within the crypto markets, they are still disputes when it comes to securities and trading.
One of the latest in this regard is a class action complaint that has been filed against Overstock.com, former CEO Patrick Byrne and former CFO Greg Iverson which accused all involved of securities fraud and manipulation.
In official documents from the class-action case, Bryne is accused of designing Overstock’s digital asset-based dividends to punish short-sellers and this is it something he has been accused of in the past.
“While defendant Byrne had previously, at different times, launched into public tirades over short selling and naked short selling, the tZERO Dividend was his secret plot to finally obtain hegemony over them — and it almost worked,” the document says.
The dividend in question was launched in July 2019 and was called “Digital Voting Series A-1 Preferred Stock,” and traded on Overstock’s own blockchain platform but one unusual feature of this was that traders could not trade these for six months at least.
“While shares traded to a Class Period high of $26.89 each on September 13, 2019, they traded to as low as $15.50 by September 18, 2019, three trading days later, after investors learned that the tZERO dividend was designed to be a short squeeze,” the complaint says.
Since the launching of the dividends, both Byrne and Iverson have resigned from their positions with Bryne selling 13 percent of his overstock share for $90 million and his alleged departure is due to a relationship with a spy as well as issues with securities agencies.