Coinbase is being sued by an investor, Adam Grabski, for dumping their stocks on investors for personal gains. According to a lawsuit filed by the investor, Coinbase Inc.’s Chairman and Chief Executive Officer, Brian Armstrong; board member Marc Andreessen; and other officers avoided more than $1 billion in losses by using inside information to sell stock within days of the cryptocurrency platform’s public listing two years ago, before news sent the share price tumbling.
Coinbase is a San Francisco-based cryptocurrency exchange that allows users to buy, sell, and store various cryptocurrencies. It was founded in 2012 and has since become one of the largest and most well-known exchanges in the world.
It offers a user-friendly platform for individuals and institutions to trade cryptocurrencies, as well as Coinbase Pro, Coinbase Custody, and KYC and AML regulations.
Further details about the suit show that Coinbase’s board of directors used a direct listing procedure rather than a more traditional initial public offering and quickly sold off $2.9 billion in stock.
The complainant added that after Coinbase officials sold the stocks, the Coinbase management team blamed the decline in the stock price on widespread negative information about the company. Coinbase shares saw a decline in value of over $1 billion, wiping over $37 billion from the company’s market capitalization.
More allegations against Armstrong
There are allegations against the CEO that he sold more than $291 million of Coinbase stock as part of the direct listing, while Andreessen Horowitz, a venture capital firm owned by Andreessen, sold about $118 million in shares during the same period.
In response to these allegations, which resurfaced after the SEC sued Coinbase for listing unregistered securities, Coinbase told Bloomberg via mail that the allegations against the company were baseless. Coinbase also sued the SEC, requesting that the Federal Court require the SEC to establish a specific rule for regulating the crypto industry.