Overstock Sued for Allegedly Following Bitcoin Frenzy
If Overstock.com continues to loose market value, at least it won't be alone.
To start the month, the stock market dove more than 750 points before rebounding to an overall loss of 459 points for the day. Investors were scared off by tariff wars and problems in technology companies.
It was bad for Overstock.com, too, but not as bad as the allegations in a new stockholder lawsuit. A new class action claims the company defrauded shareholders by using blockchain technology as "a thinly veiled strategy to take advantage of the Bitcoin Frenzy."
As if the data breach at Facebook and Trump's attack on Amazon weren't bad enough, Bitcoin has lost half its value in the first quarter of 2018. Researchers say it will fall another third this year.
Overtstock made the mistake of buying into the Bitcoin frenzy that was so last year. Now investors claim Overstock tricked them into buying shares based on the Bitcoin promise.
The company had announced plans to "raise up to $500 million in 'coin offering,' consisting of sales of new digital coies for proejcts based on the blockchain technology of the digital currencies Bitcoin and Ethereum," according to the lawsuit. The announcement bumped Overstock price up from $16.45 to $86.90 per share -- a 500 percent increase -- in five months.
"But the truth was that: (1) Overstock's coin offering was highly problematic and potentially illegal," the complaint said. Second, the lawsuit said, the company was hemorrhaging money.
In the meantime, Overstock announced that the SEC requested information about it's proposed coin offering. That delayed the offering, which the company later withdrew.
Shares plummeted during that time, and the investors want those losses back. In the grand stock market scheme, however, they will have to take a number.
The Dow industrials dropped more than 1,000 points in early February, with a paper loss of $5 trillion loss for global markets. In March, they were on track for the worst month in two years.
For investors, April 2 was a day later and more dollars short. Yeah, a cruel joke.
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