Overstock said Wednesday it will loosen a bizarre tangle of restrictions on a blockchain-based dividend that critics said was concocted by ex-chief Patrick Byrne to stymie short sellers.
Hours later, Byrne said he sold 4.7 million shares between Monday and Wednesday for a little under $100 million. In a blog post, he rattled on about a government conspiracy to help the company’s short sellers as the reason for the sale.
Shares of the discount furniture site have been on a roller-coaster ride in recent weeks because of the terms of Byrne’s crypto-dividend, which was slated to be awarded to shareholders of record as of Sept. 23.
Accessible only through a brokerage called Dinosaur Financial, the dividend wasn’t payable until Nov. 15 and wasn’t tradeable until six months after that.
Scrambling to avoid the hassle, short sellers — who place complex trades that are effectively bets that a stock will drop — began buying Overstock shares more than two weeks ago to exit their positions, sending the stock to a 52-week high of $29.75 on Friday.
But, as reported by The Post on Tuesday, the stock began plunging soon after as brokers JPMorgan and Morgan Stanley began offering their short-selling clients a cash alternative to the dividend.
On Wednesday, Overstock — which saw its eccentric, longtime chief executive exit on Aug. 22 after he said he got romantically entangled with a Russian spy who sent him running to the arms of the FBI — said it was putting the dividend on hold while it makes it easier to trade.
“We are working with the appropriate regulatory authorities to structure the issuance of the [blockchain] dividend shares so they would be freely tradable by non-affiliates immediately upon distribution,” Overstock said.
Under the dividend plan revealed, a crypto-payment was to be awarded to Overstock shareholders of record as of Sept. 23 on tZero, a blockchain-based trading platform operated by an affiliate of Overstock.
Overstock’s shares fell 8 percent, to $16.19 a share, on Wednesday.