Online retailer and early Bitcoin adopter Overstock has filed for the dismissal of a lawsuit that accuses the company of misrepresenting the nature of its ‘digital dividend’ token.
The dividend is a security token airdrop that will see ‘OSTKO’ tokens distributed to company shareholders on a basis of one token to every ten Overstock shares.
News of the dividend caused a share price surge and the lead plaintiff accuses Overstock of deliberately withholding information regarding the distribution, and of deceiving the market to intentionally punish short sellers.
Overstock’s digital dividend distribution is set to take place on May 19.
Overstock rejects manipulation accusations
For its part, Overstock argues the lead plaintiff in the case, The Mangrove Partners Master Fund is a “well-known short-seller,” despite claiming to be an institutional investor.
In its filing, Overstock asserts “There is no allegation that Overstock misrepresented the nature of the Dividend, or sought to hide the impact it would have on short sellers.”
“In fact, Plaintiff concedes that the impact was widely known and reported from day one. This alone warrants dismissal,” the firm adds.
Overstock accused of market manipulation
The consolidated suit also accuses Overstock, ex-CEO and founder Patrick Byrne, former CFO Gregory Iverson, and current retail president David Nielson of violating securities laws amid Byrne’s sudden departure from the company and the liquidation of 20% of his Overstock shares last year.
The suit claims that Overstock issued misleading year-end predictions concerning the profitability of its security token exchange tZERO to drive up the price of OSTK shares — allowing Byrne to cash out at a premium.
On top of the bullish fervor surrounding tZERO, news of the digital dividend drove the price of OSTK up over 97% during September — resulting in over $90 million in profits to Byrne, the suit alleges.
Overstock later conceded that its previous year-end guidance was inaccurate, culminating in a series of OSTK price crashes.
Credit Source link