Amid executive turbulence, Overstock’s blockchain subsidiary full steam ahead

By September 27, 2019 Bitcoin Business
Click here to view original web page at www.deseret.com
Rick Bowmer, Associated Press
FILE - This April 3, 2013 file photo shows bitcoin tokens at a shop in Sandy, Utah.

MIDVALE — Even in the face of a month of unprecedented turbulence for Utah e-commerce platform Overstock.com, the company’s blockchain technology-focused investment subsidiary Medici Ventures appears to be moving full steam ahead and on Thursday announced a $2 million investment in Salt Lake-based identity security startup Evernym.

Overstock’s market value has reeled since mercurial figurehead and longtime CEO Patrick Byrne resigned in late August following news stories, and statements from Byrne, that detailed his alleged involvement in covert, international government investigations. Last week, Byrne divested almost 5 million shares of stock in the company he remade in the 1990s, and then Overstock Chief Financial Officer Greg Iverson resigned. After hitting a three month low of $11.19 on Sept. 18, the day after Iverson announced his departure, the stock has recovered slightly and was trading at $12.53 at the end of regular trading Thursday, a price that falls below the company’s 2002 IPO per share value.

Medici, however, remains bullish on the downstream potential of companies putting blockchain technology to practical use. Its investment in Evernym, by way of convertible, simple agreement for future equity (SAFE) certificates, appears as further evidence of an ongoing mission the company says is driven by the goal to “democratize capital, eliminate middlemen and rehumanize commerce.”

Jonathan Johnson, Medici president and now the official Overstock CEO following his interim appointment after Byrne’s exit, said Evernym is innovating new, blockchain-based tools to allow individuals to assert control over their personal identity information.

“Evernym is bridging the gap between the siloed approach to identity and true self-sovereign identity,” Johnson said in a statement. “Evernym’s platform allows every person, organization and connected thing to have an independent identity. Evernym fills out Medici Ventures’ identity pillar within our keiretsu and will help advance our government-as-a-service technology stack for civilization.”

Evernym President Steve Havas told the Deseret News the personal identity protections his company is innovating, which run off a decentralized, distributed ledger blockchain platform, are already being adopted by some consumer-facing financial institutions looking to bolster identity security.

“At Evernym, we’re adding a layer of trust to the Internet,” Havas said in a statement. “Our self-sovereign identity platform allows organizations to issue verified digital credentials to their customers, which those consumers can then use to prove who they are to anyone, anywhere.

“As a result, businesses can foster more trusted digital relationships with their customers, while offering a more secure, seamless and privacy-protecting experience.”

While issues with cryptocurrencies based on distributed ledger platforms have, perhaps, become the most visible touchstone for the general public’s familiarity with blockchain, a recent Forbes report by Jefferson Nunn noted the utility of decentralized systems has much broader potential uses. Nunn notes that since the 2017 Equifax breach that leaked data on as many as 143 million Americans, another 29 major breaches have exposed the personal data of 1 billion people worldwide.

“Bitcoin and blockchain have been attacked by pundits solely because of the price action,” Nunn wrote. “A closer look by enterprising professionals could reveal a treasure trove of improved security and reliability around personal data and to reduce the threat of attacks. Companies of all types, including insurance companies, could save billions by taking the proper action to secure the data.”

In a Deseret News interview last month, Johnson said over $200 million has flowed into the Medici investments and he expects that moving forward, the growth of the blockchain-based product innovations will outpace what’s happening in an e-commerce realm that has a lot more competitors now than when Overstock launched in 1999 as an inventory liquidator.

“I see strong growth on both sides, but the potential for exponential growth is in the blockchain companies,” Johnson said. “Many of the (18 currently) companies in the portfolio now have products in, or nearing, production.”

Industry watchers generally viewed Byrne’s separation from the company, both as an executive and later as a stockholder, as a net win for Overstock, particularly in light of the nature of his claims as being some sort of “deep state” operative. But Iverson’s exit appeared to touch off investor worries.

In the meantime, Overstock has appointed a veteran financial officer, Robert Hughes, as acting chief financial officer and begun a search for a permanent replacement.

Johnson said having someone with Hughes’ background and experience overseeing Overstock finances while the search for a permanent replacement plays out will ensure the company “does not miss a beat.”

“Rob was the company’s (senior vice president) of finance and risk management for five years and v.p. and controller for four years. He is intimately familiar with Overstock’s businesses and financial systems,” Johnson said in a statement. “Under his guidance, Overstock had steady and positive financial results and reporting. I’ve worked closely with Rob for many years, and he is a great person to oversee our finance department while we look for a permanent CFO. I appreciate his willingness to step in during the transition.”

Overstock declined a Deseret News request for comment on Byrne’s stock liquidation, instead referencing a statement distributed by the company in a press release Monday.

“Since his departure on Aug. 22, Byrne has not held any management or board responsibility,” the statement reads. “Byrne continues to be a public figure, and the views he expresses and actions he takes are his own.”

Leave a Reply