Overstock rejects allegations of fraud related to its digital dividend

U.S.-based e-commerce company Overstock hopes to convince a Utah district court judge to file a class action fraud case related to the company's digital dividend and its effect on short sellers.

In a report, the point-by-point answer to the plaintiffs

In a report filed on May 12, Overstock wanted to respond to the two main allegations cited in the case, namely that the company had issued false statements in 2019 on its financial future and that it had deliberately launched the digital dividend (a tokenized security whose listing was planned on the trading platform of the affiliate company tZero) in order to create forced pressure on short sellers.

Regarding the first point, the defense of the e-commerce company underlines the fact that the financial projections of Overstock are "forward-looking statements par excellence protected by the safe harbor of the Private Securities Litigation Reform Act".

Furthermore, the plaintiffs – led by the Mangrove Partners Master Fund, Ltd. – did not provide any "facts" as evidence that the statements had been false at the time of their publication, he claims.

"In fact, the complaint does not even contain an explicit accusation – made by any person, group or internal document – which suggests that one of the accused was aware of or had access to information incompatible with any disputed claim," reads the file. On the second point, while Patrick Byrne – at the time CEO of Overstock and defendant in the lawsuit – had long argued that short sellers were an evil to be abolished, Overstock says that the lawsuit does not actually provide accusations of a "misleading act". .

More specifically, he says that the defendants did not claim that Overstock had deliberately placed "inaccurate" information about its digital dividend on the market. The fact that the dividend was problematic for short sellers had been "recognized and publicized" by the observers of market the day it was announced, says Overstock.

And the fact that the defendants recognized him in their denunciation "is fatal when a manipulative act and an addiction are supported". With these reasons, Overstock asks the Utah court to close the case, as "the vast media coverage belies the plaintiff's argument that the defendants' behavior or statements deceived anyone."

Suspicious movements of the former CEO of Overstock

The lawsuit was originally filed on September 27, 2019, when investor Benjamin Ha was in the front line. He claimed that Overstock had made false claims to artificially inflate the value of Overstock's shares and allowed Byrne to sell all of his shares – valued at over $ 100 million at the time – at unrealistic prices when he left the company. B

yrne left the company last August after revealing that he had a three-year relationship with a Russian agent and acted as a confidential informant for law enforcement agencies.