Meet Patrick Byrne: Bitcoin Messiah, CEO of Overstock, Scourge of Wall Street (2024)

It was typical Byrne. When I press him, he can't quite support this claim, and certainly, the SAC indictment had nothing to do with naked shorting. But Byrne has spent years complaining about the practices of Cohen and SAC. In his own way, he's trying to show that hedge funds and banks are exploiting many holes in the system. And behind the scenes, he continues to work in subtler ways to plug these holes.

Over the years, the Overstock CEO has cultivated a vast network of like-minded souls who believe in greater reform on Wall Street. He has a way of attracting Wall Street whistleblowers and then helping to push their stories into the public eye, via the courts and through reporters sympathetic to his cause. One of these whistleblowers is Mark Rosenblum, a former employee at Thomson Reuters who sued the news and business information firm, claiming he was fired for telling the FBI the firm was selling key economic data to certain traders before it was released to the rest of the market.

"I would not have had the courage or the necessary resources to come forward without Patrick," Rosenblum says, explaining that Byrne has not only helped put him in touch with the right people but helped with his legal bills.

Byrne's crusade is almost pathological, and some argue this is a product of his well-documented health problems. Over the years, he has gone under the knife 29 times, including eight surgeries for an irregular heartbeat, a residual effect of his cancer. His last surgery was in late January. "He's trained in philosophy -- which means he takes a larger view already -- and he’s also struggled with his health," says Robert Shapiro, a Harvard-trained macroeconomist who served as president Bill Clinton's undersecretary of commerce and is now a consultant to companies that believe they've been victimized by abusive naked short selling, including Overstock. "People who come through those challenges, particularly when they're young, have a very different view of the world. They are less concerned with the bullsh*t -- and more concerned with larger things."

Some believe his cancer has nothing to do with his attitudes -- and that includes Byrne himself. But his concern and determination are very real. It's evident yet again with Overstock's move to bitcoin. To many, the bitcoin revolution is insanity, but after deciding the digital currency was the way forward, Byrne struck a deal with a bitcoin payment processor and pushed the digital currency onto his site in a matter of days. "I didn't want someone else to beat us," he says. Days after that, he moved millions from his personal fortune into the digital currency.

Beyond Bitcoin

Once again, Byrne is looking beyond the moment. He argues that bitcoin is an idea that can change more than money. He believes it can change Wall Street too, putting an end to the corruption he has spent so many years fighting. And others agree.

Bitcoin is a currency, like the dollar or the euro, and it's a money transmitter, like a credit card network or PayPal. But at the most basic level, the worldwide software system that underpins bitcoin is really just a means of instantly verifying that you've sent something to someone else. "It allows for the decentralized proof and transfer of ownership," says Fred Ehrsam, the co-founder of Coinbase, the outfit that handles bitcoin transactions on behalf of Overstock.

Because its ledger of funds is completely public, users always know how much money there is and where it is. That's one of the reasons Byrne is so attracted to it. He knows that, as with gold, the supply is limited. Governments and banks can't make more of it. But as Ehrsam points out, the bitcoin framework could also be used for things other than money -- like stocks.

"It so happens that the first application of this is payments and money, but it doesn't have to be," Ehrsam says. "It could transfer a securities, too." In other words, it would be feasible to build a bitcoin for the stock market, a system that would quickly, easily, and reliably move securities, a system that would make it clear who owns what at any given time, a system, in other words, that could completely eliminate naked short selling and other schemes like it.