Coinbase Execs Sued For Alleged Insider Trading, Lose $37B

• A Coinbase shareholder has filed a lawsuit against the crypto exchange’s nine executives and board members, accusing them of profiting from insider information during the company’s public listing.
• Executives and board members allegedly sold up to $2.9 billion in Coinbase shares within a month after the company’s public listing.
• The plaintiff is seeking damages for breach of fiduciary duty and unreasonable enrichment against them.

Coinbase Executives Sued

A Coinbase shareholder has filed a lawsuit against the crypto exchange’s nine executives and board members for allegedly profiting from inside information during the company’s public listing.

Profiting From Inside Information

The stockholder alleges that the executives gained insider information during the company’s public listing and used it to benefit financially by selling off large quantities of Coinbase shares. Securities filings revealed that the defendants sold up to $2.9 billion in Coinbase shares within a month after the company’s public listing.

Defendants’ Actions Resulted In Losses

The suit claims that these actions resulted in massive losses to both the Company and other shareholders, with share prices suffering over 37% decline by May 18th due to “the compression of revenue margins” which was not disclosed before they sold their stock. The plaintiff is seeking damages for breach of fiduciary duty and unreasonable enrichment against them as a result of this alleged misconduct.

CEO Sold Off Shares Worth $291M

The filing noted that CEO Brian Armstrong sold $291.8 million worthof Coinbase shares, while Chief Financial Officer Alesia Haas and Chief Operating Officer Emelie Choi sold $99.3 million and $219.7 million worth respectively. Fred Wilson sold off the largest number of shares – approximately $1.8 billion worth – before Coinbase went public, representing 7% of all available stock at the time .

IPO Could Have Prevented Dilution

Granski believes that an Initial Public Offering (IPO) instead of a direct listing would have prevented this dilution from happening, as defendants wouldn’t have had access to confidential information beforehand which allowed them to sell their stock when it was still at its peak value prior to disclosure..