Overstock’s Patrick Byrne: the rise and fall of a blockchain pioneer

Patrick Byrne this week resigned as CEO of US online retailer Overstock. The move closely followed the announcement of disappointing Q2 2019 financial results.

In a letter, he said it was impossible to continue due to distraction and fallout related to his involvement in a Federal Bureau of Investigation Russian espionage probe.

“While I believe that I did what was necessary for the good of the USA, for the good of the firm, I am in the sad position of having to sever ties with Overstock, both as CEO and board member,” Byrne wrote. “It has been an honour to serve you through thick and thin, threats grand and arcane, for the past 20 years.”

He also confirmed media reports that he had a personal relationship with Maria Butina, a convicted Russian agent currently in a US prison. Overstock veteran Jonathan Johnson will assume the role of CEO on an interim basis, while Kamelia Aryafar will take his place as board member and Executive Vice President of Overstock Retail.

“Patrick has successfully created and moulded Overstock over the years by pioneering the marriage of tried and proven competitive business principles with cutting edge data analytics and technology; a true visionary,” said Aryafar. “I am excited to join the board and I look forward to continuing the company’s trajectory and contributing to its future success.”

Blockchain revolution

Under the watch of Byrne, Overstock had in recent years shifted much of its focus from selling stuff to blockchain technology.

As Bitcoin soared, the company’s share price hit an all-time high of $84 and then, as the cryptocurrency ran into troubled times, plunged to below $10.

Overstock was one of the first traditional retailers to embrace Bitcoin, accepting it for payments in 2014. And it has also developed a cryptocurrency trading platform called tZero and a digital token of the same name. This officially launched in 2018 through its blockchain subsidiary, Medici Ventures, raising over $130 million in an initial coin offering last summer. Despite an ongoing SEC investigation, Overstock is set to make tZero trading available to non-accredited investors this month.

In his resignation letter, Byrne said that he didn’t want Overstock’s business and its blockchain initiatives to be affected by his ties with the Russians and Washington.

“I think the blockchain revolution will reshape key social institutions,” he wrote. “We have designed and breathed life into perhaps the most significant blockchain keiretsu in the world, a network of blockchain firms seeking to revolutionise identity, land governance (= rule of law = potential = capital), central banking, capital markets, supply chains, and voting.”

“In three of those fields (land governance, central banking, and capital markets)… our blockchain progeny (Medici Land Governance, Bitt, and tZERO, respectively) are arguably the leading blockchain disruptors in existence.”