Russian spy Maria Butina (via Wiki commons)
Innovators

Patrick Byrne overstocks on Russian agent, resigns

Overstock.com CEO bows out after placing himself at the center of a scandal involving a Russian agent and election interference

Take one sultry Russian agent, a middle-aged tech CEO nearly twice her age, and add in the FBI, Hillary Clinton, allegations of election interference, and vague comments about the “deep state” and “Men in Black,” and you’ve got the makings of Netflix’s next hot series.

Or, the reason the CEO of Overstock.com resigned on August 22 from the dot-com company he built into a major online retailer. 

It came 10 days after Patrick Byrne, 56, pressed the button on the implosion of his public life. At 7:03 p.m. ET on August 12, his firm posted a bizarre press release on its investor relations page titled, “Overstock.com CEO Comments on Deep State, Withholds Further Comment.” 

It’s the stuff of nightmares for public relations flacks—and investors’ nightmares, it turns out. His press release caused Overstock.com’s shares to tank, dropping from almost $25 to less than $15 within 48 hours. It had recovered in the past week, returning to about $21 on August 22.

The cause of Byrne’s sudden resignation was not Overstock’s sorry financials, but his still-somewhat-vague involvement and romance with Maria Butina, now serving 18 months in federal prison for acting as a Russian agent. Details include having a romantic relationship with her while also informing the FBI of her activities.

Byrne’s resignation on August 22 described his decision to step down as a consequence of doing his “duty as a citizen” in coming forward about his involvement in the Butina affair.

It also reiterated his faith that “the blockchain revolution will reshape key social institutions.”

Overstock.com will be helmed by interim CEO Jonathan Johnson III, who will retain his permanent role as president of the firm’s blockchain division, Medici Ventures. He expressed his support for the company’s blockchain-focused goals, saying, “I am confident Overstock’s future—both in retail and blockchain—is bright.”

Other companies under Medici’s umbrella include digital currency FinTech Bitt Digital and Medici Land Governance, which seeks to bring land titles onto a blockchain. Other Medici companies include voting platform Voatz, and blockchain ID firm Netki.

“We have designed and breathed life into perhaps the most significant blockchain [conglomerate] in the world,” Byrne said in his resignation letter. Under Medici Ventures, Overstock.com had built “a network of blockchain firms seeking to revolutionize identity, land governance, central banking, capital markets, supply chains, and voting,” he added.

All in on blockchain

Byrne was one of the first and highest profile CEOs of a public company to embrace blockchain technology so thoroughly. Overstock.com was among the first major retailers to accept bitcoin payments.

He had been turning the online retailer into a blockchain company, creating a major blockchain division, within the firm. Among its startups is the tZERO security token trading platform, which opened itself to retail investors on August 12, the same day Byrne posted about the “deep state.” The U.S. Securities and Exchange Commission (SEC) has been investigating tZERO’s initial coin offering (ICO) as an unregistered securities sale since March 2018, according to Reuters.

Overstock.com’s share price had soared along with the cryptocurrency market in 2017. It grew 265% over the course of the year, rising from around $15 to more than $85 in early 2018. But it had collapsed during the crypto winter, falling back to around $20 at the beginning of 2019. While the company’s financials have been grim for some time—it has lost money for nine consecutive quarters, according to the Wall Street Journal [subscription required]—its share price had more than doubled in the past two months.

Byrne placed 33rd on the 2019 Modern Consensus 100 Most Influential People in Crypto list in January. 

Leo Jakobson, Modern Consensus senior editor, is a New York-based journalist who has traveled the world writing about meeting and incentive travel, as well as the consumer and employee loyalty business. He also covered the East Coast side of the Internet boom and bust, small businesses, and New York City crime, nightlife, and politics. Disclosure: Jakobson owns no cryptocurrencies.

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