US Judge U-Turns on Ruling in Overstock Digital Dividend Lawsuit
US Judge U-Turns on Ruling in Overstock Digital Dividend Lawsuit
A senior district judge in Utah has acknowledged he made a “mistake” when granting Overstock’s motion to dismiss a lawsuit over its digital dividend issued in 2019.
- In late September 2020, Overstock, the bitcoin-friendly e-commerce firm, was granted the motion to dismiss the case brought by the Mangrove Partners Master Fund.
- In the latest filing on Jan. 6, Judge Dale Kimball said he had “overlooked” a footnote from the plaintiff requesting permission to file an amended complaint if the motion was granted.
- The case hinges around the digital dividend that Overstock paid to investors, with Mangrove alleging it was deliberately designed to create an artificial squeeze on short sellers.
- The plaintiff also claimed Overstock had made false declarations about its financial future.
- The shareholder dividend took the form of a digital security listed on Overstock affiliate tZero’s trading platform.
- Patrick Byrne, Overstock’s CEO at the time and a defendant in the lawsuit, was famously anti-short sellers and reportedly first became interested in blockchain as a way to limit their actions.
- With Judge Kimball now acknowledging his error in granting Overstock’s motion, he has now nullified the original ruling and granted Mangrove permission to file an amended complaint.
