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Coinbase’s Top Management Accused of Dumping Millions to Avert Losses Using Insider Trading

First Insider Trading Case Victory Sees Coinbase Awarded $470,000

Fresh trouble is brewing for Coinbase as a lawsuit alleges that the top leadership of the crypto exchange sold stock using inside information and avoided significant losses.

The accused parties involved include Coinbase’s CEO Brian Armstrong, board member Marc Andreessen, and other officers, who are being accused of selling stock with the help of inside information just days after the platform’s public listing in 2021, thus avoiding losses of over $1 billion.

  • Adam Grabski, the investor who filed the lawsuit, claims that the firm’s management sold off their stock before the release of “material, negative information that destroyed market optimism from the company’s first quarterly earnings release forward,” prompting a decline in the share price.
  • The complaint was unsealed in Delaware Chancery Court on Monday, revealing that Coinbase’s board conducted a direct listing instead of a traditional initial public offering and quickly sold off $2.9 billion in stock.

“Within five weeks, those shares declined in value by over $1 billion, and Coinbase’s market capitalization plummeted by more than $37 billion.”

  • Armstrong reportedly sold more than $291 million worth of Coinbase stock as part of the direct listing.
  • Andreessen Horowitz, the venture capital firm owned by Andreessen, also sold more than $118 million worth of the stock during the same period, according to the complaint.
  • When contacted by Bloomberg, Coinbase dismissed the allegations as “meritless claims.”
  • The lawsuit comes a month after the US Securities and Exchange Commission (SEC) sent Coinbase a Wells Notice for listing unregistered securities.
  • Tensions have been growing between the firm and the regulator for some time.
  • In retaliation, the NASDAQ-listed company filed its lawsuit against the SEC, asking a federal court to compel the regulator to provide clearer guidance on the rules governing the crypto industry.