Online retail giant Overstock is to drop trading restrictions for its planned digital asset-based dividend instigated by the e-commerce giant's former CEO, Patrick Byrne.

Before leaving the firm over a scandal involving his affair with a Russian spy, Byrne in July had arranged for Overstock's next investor dividend to be paid out in a digital security listed on its tZERO subsidiary’s trading platform.

Approved by the company’s board of directors, the dividend will see that one digital voting series A-1 preferred stock (series A-1) will represent 10 shares of common stock, or 10 shares of voting series B preferred stock, the firm said at the time.

It also specified that the digital stock could only be traded through a Dinosaur Financial Group brokerage account and would not be tradeable for six months after the Nov. 25 distribution.

In an announcement emailed to CoinDesk on Wednesday, however, Overstock said it's putting the dividend on hold temporarily in order to restructure it to make the stock freely tradeable and do away with the six-month lockup.

"In order to provide greater liquidity, we are working with the appropriate regulatory authorities to structure the issuance of the dividend shares so they would be freely tradable by non-affiliates immediately upon distribution. We believe this will be a major benefit to investors," the firm said, adding that it's "working closely with regulators to register the shares and achieve that result."

The change comes a day after a New York Post report that suggested the digital dividend had been thought up by Byrne as a means to stymie short sellers of Overstock stock, who he has long accused of targeting the firm. Byrne's even said the shorting conspiracy was led by an anonymous criminal he dubbed the “Sith Lord.”

The report further said that Byrne's plan had briefly worked, since the short sellers were not willing to deal with the tokenized dividends. As a result, Overstock's share price shot up to a 52-week high last week.

New York Post sources, however, said that JPMorgan and Morgan Stanley brokers had opened the doors for the short sellers, offering to accept dollars at an equivalent value to the blockchain-based stock – news that caused Overstock's stock price to drop by over 40 percent after Friday's high.

Overstock said in its announcement that it expects to announce a new record date for the dividend in roughly three to six weeks. After that, a new distribution date will be provided, "which may be sooner or later than the previously announced November 15, 2019 distribution date."

Patrick Byrne image via CoinDesk archives