(Bloomberg) — Coinbase Inc. Chairman and Chief Government Officer Brian Armstrong, board member Marc Andreessen and different officers prevented greater than $1 billion in losses by utilizing inside data to promote inventory inside days of the cryptocurrency platform’s public itemizing two years in the past, earlier than dangerous information despatched the share value tumbling, in response to a lawsuit filed by an investor.
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The corporate’s board deployed a so-called direct itemizing as an alternative of a extra typical preliminary public providing and quickly bought off $2.9 billion in inventory earlier than Coinbase administration later revealed “materials, adverse data that destroyed market optimism from the corporate’s first quarterly earnings launch ahead,” in response to the criticism unsealed Monday in Delaware Chancery Court docket.
“Inside 5 weeks, these shares declined in worth by over $1 billion, and Coinbase’s market capitalization plummeted by greater than $37 billion,” claimed the investor, Adam Grabski, who mentioned he’s held Coinbase shares since April 2021.
Armstrong bought $291.8 million of Coinbase inventory as a part of the direct itemizing, in response to the criticism, whereas Andreessen’s enterprise capital agency, Andreessen Horowitz, dumped $118.6 million value of the inventory.
“As the most well-liked and solely publicly traded crypto change within the US, we’re at occasions the goal of frivolous litigation,” Coinbase mentioned in an emailed assertion. “That is an instance of a kind of meritless claims.”
The so-called by-product criticism filed on the corporate’s behalf seeks the return of “ill-gotten positive factors” from Armstrong and Andreessen, together with President Emilie Choi, Chief Monetary 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.
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The case is Grabski derivatively on behalf of Coinbase International Inc. v. Andreessen, Case No. 2023-0464-KSJM, Court docket of Chancery, State of Delaware.
(Updates with shares bought in fourth paragraph.)
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