A Coinbase stockholder sued the company’s executives in Delaware on Monday, May 1, for dumping the company’s stock. According to the allegations, insiders—including Chairman and Chief Executive Officer Brian Armstrong, Board Member Marc Andreessen—sold around $3 billion in shares. This was done right before the management revealed “material, negative information that destroyed market optimism from the company’s first quarterly earnings release forward.”
On April 14, 2021, Coinbase became a Nasdaq-listed company. At that time, COIN was trading over $380 per share in the beginning. It went on to claim a high of $429 per share on its volatile first day. According to the filing,
“Defendants took full advantage of the absence of any lock-up in the Direct Listing, rapidly selling over $2.9 billion of Coinbase stock on the first day and in the days that followed, from April 14, 2021, through April 22, 2021.“
In fact, the plaintiff Adam Grabski claimed that he has held Coinbase shares since April 2021. The filing went on to highlight that by May 18, 2021, COIN declined by more than 37% since its listing, wiping out just over $37 billion in value.
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Claims are ‘meritless’: Coinbase representative
According to the filing, Armstrong sold $291.8 million worth of COIN. Furthermore, Andreessen’s venture capital firm, Andreessen Horowitz, got rid of $118.6 million worth of the stock.
Additionally, others targeted in the case include Coinbase President Emilie Choi, Chief Financial Officer Alesia Hass, Chief Accounting Officer Jennifer Jones and former Chief Product Officer Surojit Chatterjee, and Board Members Frederick Ersham, Fred Wilson, and Kathryn Haun. Based on the filing,
“By positioning themselves to sell their shares immediately after the Direct Listing but before revealing crucial information to the public, Defendants avoided $1.09 billion in losses.“
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In an e-mailed statement to Bloomberg, a Coinbase representative labeled the claims to be “meritless,” and said,
“As the most popular and only publicly traded crypto exchange in the U.S., we are at times the target of frivolous litigation. This is an example of one of those meritless claims.”
Coinbase in double trouble
In another parallel complaint filed, Coinbase has been blamed for illegally collecting face templates and fingerprints of its customers. This violates Illinois’ biometric privacy law, according to the complaint. The class action suit has been filed by Belgian Law Group, Fradin Law, and Simon Law on behalf of customers who object to having to upload selfies of their faces or having their fingerprints scanned to sign up or access an account. According to the complaint,
“Coinbase has created, collected, and stored thousands of ‘face templates’—highly detailed geometric maps of the face—and fingerprints from countless Illinois residents.”
The company’s collection and storage of this data exposes users to “serious and irreversible privacy risks,” such as identity theft, in the event of a data breach, the suit additionally alleged.
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