A federal judge in Utah overturned his own dismissal of a class action lawsuit against online retailer Overstock alleging so manipulated the market by issuing a security to shareholders last year.
6th January Judge Kimball overturned his previous decision to dismiss the lawsuitto grant plaintiffs’ October motion for an amended consolidated claim.
The class action lawsuit was filed by lead plaintiff Mangrove Partners Master Fund in September 2019, claim that Overstock lied about the purpose of its OSTKO security tokenPlaintiffs claim they should “punish” sellers in short positions.
The lawsuit alleges that too Overstocking has misled investors about retail finances and did not reveal that had not taken out liability insurance for directors and officers.
The judge had previously filed motions to dismiss the lawsuit in September last year. after it was determined that Overstock’s issuance of security tokens did not manipulate the market and that changes to the company’s income statement were protected by the Private Securities Litigation Reform Act. At this moment Kimball concluded that the complaint was “a classic attempt to allege fraud”.
But on Wednesday Judge Kimball said he made a “mistake” failure to include a footnote contradicting plaintiffs’ motions to dismiss and requesting permission to file an amended complaint should result in the case being denied.
The apparently long footnote too included new evidence from confidential witnesses what the plaintiffs argue shows that Overstock executives were aware of the magnitude of his financial problems.
Overstock’s OSTKO security token was approved for trading with its alternative trading system tZERO in May 2020.and the token rose from around $ 10 to a high of $ 89 in mid-August. Since then, The token has fallen by 50%.
According to Stomarket OSTKO has a market capitalization of nearly $ 212 millionwhat it would rank as the 85th largest cryptoasset by capitalization. OSTKO accounts for roughly half of all secondary security token trading.