Coinbase executives saved $1B by dumping stocks ahead of bad news, a lawsuit alleges

Coinbase investor Adam Grabsky filed a lawsuit in Delaware state court on May 1, accusing certain Coinbase executives and board members to avoid losses from the sale of Coinbase shares. Bloomberg claims to have used inside information to report.

The lawsuit names Coinbase Chairman and CEO Brian Armstrong, board member Marc Andreessen, and other executives for using insider information to profit from selling Coinbase shares. bottom. The lawsuit alleges that these executives avoided about $1 billion in losses by selling Coinbase shares within days of the company’s April 2021 listing.

securities report show Armstrong sold $291.8 million worth of Coinbase shares within a month of the company going public. Coinbase’s Chief Operating Officer, Emelie Choi, and Chief Financial Officer, Alesia Haas, sold $219.7 million and her $99.3 million, respectively, during the same period. Coinbase Chief Accounting Officer Jennifer Jones has sold $43.4 million worth of stock.

In addition, Andreessen sold $118.7 million worth of Coinbase stock, and Fred Ehrsam, who left Coinbase in 2017 but still owned shares, sold $219.5 million worth of stock. Surojit Chatterjee, former Chief Product Officer of Coinbase, has sold shares worth $61.9 million. Director Kathryn House liquidated $73.5 million worth of Coinbase shares.

The largest stake sale was made by Coinbase investor Fred Wilson, who owned over 7% of the company prior to its direct listing two years ago. Wilson sold $1.8 billion worth of Coinbase shares. All of these shares collectively valued him over $2.9 billion and sold him within a month of his direct listing on Coinbase.

The lawsuit alleges that those executives sold their shares before management disclosed “material and negative information from the company’s first quarterly earnings release that undermines market optimism.”

In other words, the lawsuit alleges that the named executive knew bad news was coming and sold the stock before the news was made public to avoid losses.

Plaintiff Grabsky added to the complaint:

“Within five weeks, the value of these stocks fell by more than $1 billion, and Coinbase’s market cap plummeted by more than $37 billion.”

Grabski has owned shares in Coinbase since April 2021.The stock had received an initial reference price of $250 per share, but by the end of the first trading day, Coinbase shares had transaction Over $320. Since then, Coinbase’s stock price has fallen, especially since last year. Coinbase’s stock price is currently down 85% since its listing date, trading at around $50.

In an email to Bloomberg, Coinbase dismissed the lawsuit as one of many “frivolous” lawsuits and said it was “an example of a meritless claim.”

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