- Overstock successfully completes its “digital dividend” despite an ongoing court battle.
- The dividend was distributed in OSTKO tokens and will only be available to be traded within its own tZero crypto exchange platform.
- The U.S. based internet retailer faces a lawsuit on possible damages the dividends distribution action may have had.
In a statement from Overstock, the company completed the first blockchain-based stock dividend offering to its Digital Voting Series A-1 Preferred Stock (“Series A-1”) owners. The dividend was distributed in a ratio of 1 OSTKO token to every 10 OSTK preferred security tokens owned as of April 27th, 2020. This becomes the first of its kind in the blockchain field aiming to boost the liquidity of its base exchange, tZero. A total of 4.37 million OSTKO tokens were distributed.
However, to the disappointment of some of the shareholders of the OSTK stock, Overstock announced the OSTKO token dividends released will only be available to trade on the tZero Alternative Trading System (ATS) exchange in a bid to boost liquidity on the base platform. Overstock CEO, Jonathan Johnson shared his pleasure at the first-ever successful digital dividends to shareholders. He said,
“These preferred shares have real value and have been paid a cash dividend in each of the last three years. We believe they will increase participation and long-term liquidity on the tZERO ATS platform.”
The company’s top management in the past has been at constant war with short sellers of the stock and Wall Street in general. In late 2019, the former CEO of Overstock, Patrick Byrne, and former CFO Greg Iverson was sued for security fraud in their dividend payouts. Despite registration with the U.S. Securities Exchange (SEC), the firm is yet facing another lawsuit from The Mangrove Partners Master Fund on the current dividend payout.
The plaintiff claims the company is currently punishing short sellers by interfering with markets with the effect the airdropped OSTKO tokens would have on the price of the company’s stock. They claim damages from the company on the price rise that caused a short squeeze eating into their profits.
The OSTKO dividend payouts were distributed through ComputerShare, the company’s transfer agent to the investors’ trading brokerage firms, and the connected accounts that hold their OSTK security token.