Coinbase investor Adam Grabski filed a lawsuit within the Delaware Chancery Court docket on Might 1 claiming that sure Coinbase executives and board members used inside info to keep away from losses from Coinbase inventory gross sales, Bloomberg reported.
The lawsuit named Coinbase Chairman and CEO Brian Armstrong, board member Marc Andreessen, and different executives as these taking advantage of promoting Coinbase shares utilizing insider info. The swimsuit alleges that these executives averted losses of round $1 billion by promoting Coinbase shares inside days of the agency’s public itemizing in April 2021.
Securities filings present that Armstrong bought $291.8 million value of Coinbase shares inside one month of the agency going public. Emelie Choi, the chief working officer of Coinbase, and Alesia Haas, the chief monetary officer, individually bought $219.7 million and $99.3 million, respectively, throughout the identical time. Jennifer Jones, the chief accounting officer at Coinbase bought shares value $43.4 million.
Moreover, Andreessen bought $118.7 million value of Coinbase shares, whereas Fred Ehrsam, who left Coinbase in 2017 however nonetheless owned shares, bought $219.5 million value of shares. Surojit Chatterjee, the previous chief product officer at Coinbase, bought $61.9 million value of shares. Kathryn Haus, a board member, liquidated $73.5 million value of Coinbase shares.
The largest inventory sale was carried out by Fred Wilson, a Coinbase investor who held over 7% of inventory previous to the direct itemizing two years in the past. Wilson unloaded Coinbase shares value $1.8 billion. All of those shares, collectively valued at over $2.9 billion, have been bought inside a month of Coinbase’s direct itemizing.
The lawsuit alleges that these executives bought off their inventory earlier than the administration revealed “materials, detrimental info that destroyed market optimism from the corporate’s first quarterly earnings launch ahead.”
In different phrases, the lawsuit alleges that the named executives knew there was unhealthy information coming and bought their shares forward of the information going public to keep away from losses.
Plaintiff Grabski added in his grievance:
“Inside 5 weeks, these shares declined in worth by over $1 billion, and Coinbase’s market capitalization plummeted by greater than $37 billion.”
Grabski has held Coinbase shares since April 2021. The shares had acquired an preliminary reference worth of $250 per share however by the top of the primary buying and selling day, Coinbase shares have been buying and selling at over $320. Since then, Coinbase shares have gone downhill, particularly since final yr. Presently, Coinbase shares are down 85% from the day it went public, buying and selling at round $50.
In an electronic mail to Bloomberg, Coinbase dismissed this lawsuit as one of many many “frivolous” fits it receives and mentioned it’s an “instance of a type of meritless claims.”
