Coinbase’s board may have thought Thanksgiving was for turkey, but a group of shareholders decided to serve up a derivative lawsuit instead.
Shareholder Lawsuit Alleges Insider Stock Sales at Inflated Prices
Filed in Delaware, the complaint accuses CEO Brian Armstrong, board member Marc Andreessen, and other insiders of selling $4.2 billion in stock at allegedly inflated prices while keeping the market in the dark about internal issues ranging from weak anti-money-laundering controls to ongoing regulatory investigations.
Previous Legal Scrutiny for Coinbase Executives
Coinbase is no stranger to lawsuits. An earlier suit claimed Armstrong, Andreessen, and others dodged roughly $1 billion in losses by offloading $2.9 billion of stock after the company’s 2021 direct listing.
In the latest filing, plaintiffs argue insiders prioritized their own wallets over the company’s future, using the direct listing structure — which allows immediate open-market sales — to maximize personal gain rather than raise capital for Coinbase.
Coinbase Board's Defense and Shareholder Rebuttal
Coinbase’s board disagrees, calling the sales “normal attempts to monetize long-held investments” and noting the company was “exceptionally well-capitalized” at the time. Still, plaintiffs are pushing back, citing conflicts of interest in the internal review, including a special committee member who’s an angel investor in more than 50 Andreessen Horowitz-backed startups.
In their 72-page rebuttal, plaintiffs argued the “insularity and patronage” of Silicon Valley made impartial evaluation of claims against Andreessen unlikely.
Legal Scrutiny Continues for Coinbase Insiders
Whether this is another Silicon Valley soap opera or a serious call for accountability, Coinbase insiders are about to get a second helping of legal scrutiny — and shareholders are keeping the lights on.