Note from the Publisher: Yes, we know, we used the word “naked” in a headline, which would send a 10 year old into fits of uncontrollable giggles, but we NO DOUBT have a mature audience who understands what we’re referencing, yes?! So, to that end CoinDesk has published a really interesting op-ed on how Overstock’s CEO Patrick Byrne, through his tØ subsidiary’s blockchain efforts, intends to eliminate naked short selling of Overstock shares. The piece concludes that this is an interesting way to invest in a blockchain play without actually buying cryptocurrency.
“Sometimes called the “Pariah of Wall Street”, Overstock CEO Patrick Byrne has spent decades fighting against a suspect practice known as “naked short selling”.
Naked short selling, or a naked short, occurs when a trader sells a share of stock without first procuring a “borrow” – an assurance that the shares are available to be delivered. This can lead to more shares being shorted than can actually be delivered to the buyers.
Banks could leave these unsecured shares short, as record systems are opaque, and despite risking severe penalties, the banks are not always completely honest………If Byrne could find a way to expose what was hidden by the opacity of the legacy system, shorts would panic as they would be forced to immediately cover. The naked shorting Byrne has railed about would come to light.
Overstock could rally in a manner reminiscent of Volvo when Porsche made a takeover bid and several hedge funds were caught short. The resulting short squeeze briefly made Volvo the most valuable company in the world.
At Money 2020, Byrne took the stage last month and announced his solution to the shorting problem.
Overstock will issue a special rights offering for preferred shares of stock on Overstock’s own transparent blockchain platform, tØ, a subsidiary of their blockchain investment holding corporation, Medici……”