An investor has filed a lawsuit claiming that Brian Armstrong, the Chairman and CEO of Coinbase Inc., along with board member Marc Andreessen and other company officers, allegedly used inside information to sell their stocks shortly after the company's public listing. This alleged action saved them from incurring losses of over $1 billion, as the share price of the cryptocurrency platform plummeted due to negative developments.
According to the recently unsealed complaint in Delaware Chancery Court, instead of opting for a conventional initial public offering (IPO), Coinbase's board chose a direct listing method and swiftly sold $2.9 billion worth of stock. Subsequently, Coinbase management disclosed significant negative information that had a negative impact on market sentiment, starting from the company's first quarterly earnings release.
The investor, Adam Grabski, who has been holding Coinbase shares since April 2021, alleges that within a span of five weeks, the value of those shares dropped by more than $1 billion. Additionally, he claims that Coinbase's market capitalization suffered a steep decline of over $37 billion during that period.
According to the complaint, Brian Armstrong sold $291.8 million worth of Coinbase stock as part of the direct listing. Similarly, Andreessen Horowitz, the venture capital firm associated with Marc Andreessen, sold $118.6 million worth of the stock.
“As the most popular and only publicly traded crypto exchange in the US, we are at times the target of frivolous litigation, this is an example of one of those meritless claims.” Coinbase said in an emailed statement.
A derivative complaint, filed on behalf of the company, aims to recover the alleged “ill-gotten gains” from Armstrong, Andreessen, Choi, Hass, Jones, Chatterjee, Ersham, Wilson, and Haun.
