Overstock business shares have taken a beating, plummetting 16% because of a disclosed U.S Securities and Exchange Commission (SEC) probe in its initial coin offering (ICO).

Overstock.com Inc. may be concerned at the drop but this was a golden opportunity for short sellers to capitalize, having bet against the online retailer prior to its earnings reports.

Nearly 45% of the online retailer’s shares available to trade are currently held by short sellers. Overstock attracted an increasing number of this type of investor after releasing detailed plans focused on a digital token exchange. According to financial analytics firm S3 partners, that is up from 13% at the beginning of September.

According to advisors at tZero, the blockchain subsidiary heading Overstock’s ICO:

“The investigation could result in a delay of the tZero security token offering, negative publicity for tZero or us, and may have a material adverse effect on us or on the current and future business ventures of tZero.”

On 1 March, the SEC probe was initially disclosed as a response to a request the information to be given voluntarily. This involved anything related to the plan to offer tZero tokens. Since then the stocks plummeted and lost a quarter of its value.

CEO Patrick Byrne made a statement referring to the company’s competitors: “We have already turned on the jets, and will demonstrate this year that our growth engine is far more efficient.”

He also gained attention on Thursday when he announced a “classic internet” model of growth he pledged to pursue. Overstock reported revenues of $456 million in the past fourth quarter, a drop of 13% to the same period last year.

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