A U.S. court has filed a lawsuit against cryptocurrency exchange Coinbase alleging management insider trading in shares that helped the exchange avoid huge losses after reporting financial results.
Investor Adam Grabski, on whose behalf the lawsuit has been filed in U.S. federal court, claims: Coinbase CEO Brian Armstrong, along with board member Marc Andreessen, sold stock on the exchange using insider information.
Armstrong sold more than $291 million worth of Coinbase stock in a direct listing, and venture capital firm Andreessen Horowitz sold more than $118 million worth of securities during the same period.
After Coinbase’s public listing on the NASDAQ in 2021 top executives were able to avoid more than $1 billion in losses, the plaintiff claims.
Within five weeks, the stock price dropped by more than $1 billion, and Coinbase’s market capitalization dropped by $37 billion.
Grabski is sure: management deliberately got rid of its shares before the first quarterly earnings report became available to the public.
According to this report, Coinbase’s earnings dropped significantly, and that shattered investors’ optimistic sentiments, causing Coinbase’s stock price to drop as well.
Coinbase management denied the allegations, calling them unfounded. Recently, a class action complaint was filed against the exchange for possible privacy violations in the collection of biometric data.
The trading platform also received a notice from the U.S. Securities and Exchange Commission (SEC), which suspects the platform of trading in unregistered securities.