The crypto market is faltering. Massive liquidations, record volatility, abyssal losses: digital finance is going through a storm zone. And while crypto investors are tensely gripping, exchanges are not spared. Some, like Coinbase, now face a different kind of shock: legal.
The American giant, symbol of regulated crypto, is accused by its own shareholders of profiting from the system. At stake: massive stock sales made just before the stock plunge. At stake: massive stock sales made just before the stock plunge. Brian Armstrong faces a giant hammer of justice, surrounded by accusatory silhouettes, under a cracked Coinbase logo. In 2023, shareholders sued Coinbase for allegedly dubious stock sales.
We are disappointed with the court’s decision and remain determined to challenge these unfounded allegations in court. The lawsuit could well redefine the notion of ethics in the publicly traded crypto exchanges world. For Coinbase, the insider trading accusation does not hold. The company argues that its stock price has always moved in correlation with Bitcoin, making any manipulation based on internal data impossible. But the complaining shareholders see things differently: the direct listing structure would have given executives a unique window to sell before the crypto market correction.
The committee’s lawyer, Brad Sorrels, defended this version in court. The evidence clearly showed that the defendants, including the two largest shareholders, did not want to sell, as they were confident in the company’s success. Coinbase insists on another point: these sales would have been necessary to ensure the initial market liquidity. Unlike a traditional IPO, however, the direct listing does not provide for any lock-up period. Insiders could therefore freely sell their shares from day one.
This choice, presented as a gesture of transparency, now backfires against the crypto firm, perceived as having profited from an overly permissive system. The matter goes beyond a simple shareholder quarrel. For regulators, this proceeding is an opportunity to remind that governance does not stop at promises of innovation. This trial acts as a mirror held up to the entire crypto industry: how to promote transparency when its executives are accused of abusing it?
Analysts see it as a full-scale test for the sector’s credibility. The stakes go beyond Coinbase: it is about whether crypto exchanges can still claim to be trustworthy institutions. $2.9 billion: total amount of contested internal sales. $291.8 million: value of shares sold by Brian Armstrong.
$118.7 million: amount sold by Marc Andreessen via Andreessen Horowitz. 10 months: duration of the special committee’s investigation. After Coinbase, Binance is also facing accusations. The takeaway: no one escapes transparency, especially in crypto.
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