Judge Denies Motion to Dismiss, Coinbase Directors' Insider Trading Lawsuit to Proceed

By: theblockbeats.news|2026/01/31 19:00:42
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BlockBeats News, January 31: A judge in Delaware, USA, ruled that a shareholder lawsuit alleging insider trading against several directors of Coinbase Global Inc. (including venture capitalist Marc Andreessen) can proceed. Previously, an internal investigation had concluded that the defendants did not engage in improper conduct.

The shareholders of this cryptocurrency platform filed the lawsuit in 2023, accusing multiple directors, including CEO Brian Armstrong, of using confidential information to sell over $2.9 billion in stocks during the company's 2021 IPO, thereby avoiding over $1 billion in losses. According to the shareholder complaint, Armstrong, who has been leading Coinbase since its founding in 2012, sold $291.8 million in stocks.

Judge Kathaleen St. J. McCormick on Friday denied a motion to dismiss the lawsuit proposed by the internal committee investigating the matter, citing a perceived conflict of interest by one of the committee members. However, Judge McCormick stated that the directors may still ultimately prevail as the Special Litigation Committee's report "paints a persuasive narrative" supporting their defense.

The derivative lawsuit brought against Armstrong, Andreessen, and other executives revolves around Coinbase's decision to become a public company through a direct listing instead of an IPO. A direct listing does not involve issuing new shares to raise funds, thus not diluting existing holdings or requiring a lock-up period for existing investors to trade their shares.

The complaint alleges that Andreessen, who has been a member of Coinbase's board since 2020, sold $118.7 million in shares through his Silicon Valley venture capital firm, Andreessen Horowitz, during the direct listing. The shareholders' attorneys argue that the directors, based on confidential valuation information, knew the stock was overvalued, prompting them to sell shares to avoid losses.

The directors' attorneys denied any insider trading by their clients. They argued that the plaintiff shareholders failed to provide evidence proving that the defendants possessed material nonpublic information and that it was this information that prompted them to sell their shares.

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