An investor sued Coinbase CEO and a few other board members on Monday for using inside information to avert a $1 billion loss.
In a lawsuit filed in the Delaware Chancery Court, the plaintiff, Adam Grabski, alleged that CEO Brian Armstrong, Marc Andreessen, and other board members sold Coinbase’s stocks a few days into the exchange’s public listing with internal pre-information. According to Grabski, the stock crashed days after the sales due to bad news.
The board members mentioned in the lawsuit alongside Armstrong and Andreessen are President Emilie Choi, Chief Financial Officer Alesia Hass, Chief Accounting Officer Jennifer Jones, former Chief Product Officer Surojit Chatterjee, and board members Frederick Ersham, Fred Wilson, and Kathryn Haun. The plaintiff is seeking to retrieve their ill-gotten gains, according to the filing.
Lawsuit Alleged Coinbase Management Made Clever Moves
The lawsuit also alleged that Coinbase’s board members purposefully listed its shares directly instead of the stereotypical public offerings other exchanges do, thus allowing them to sell off $2.9 billion of COIN immediately. Afterward, the crypto firm reported that misinformation among the press hampered positive market sentiments in its quarterly reports released that year.
As Grabski stated in the lawsuit, Armstrong sold $291.8 million of COIN, while Andreessen, through its venture capital firm, traded $118.6 million of Coinbase’s shares. He noted that in just five weeks, the exchange’s stocks downsized by over $1 billion, and its market cap declined by more than $37 billion.
Coinbase Rubbishes Claims
Coinbase trashed the plaintiff’s claims in response to the lawsuit, stating that they were meritless.
“As the most popular and only publicly traded crypto exchange in the US, we are at times the target of frivolous litigations, and this is an example of one of them,” Coinbase stated.
Coinbase is not alien to claims like this, as it recently received a couple of them from US regulators. Such crackdowns have forced the exchange to intensify its quest to move outside America.
