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Home Latest News Policy and regulation 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 2020, Overstock, the bitcoin-friendly e-commerce firm, was granted the motion to dismiss the case brought by the Mangrove Partners Master Fund. 

According to Coindesk, in the latest filing on Jan. 6, Judge Dale Kimball stated that 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 planned to create an artificial squeeze on short sellers.

The plaintiff also alleged that 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.

Overstock’s CEO at that time and a defendant in the lawsuit, Patrick Byrne, was famously anti-short sellers and allegedly 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.

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