A group of investors has filed a derivative lawsuit against Coinbase insiders, accusing them of selling $4.2 billion in stock at allegedly inflated prices while hiding internal risks and regulatory issues. The complaint claims the company’s direct listing structure let executives prioritize personal gain over the company’s long-term health. This echoes a similar lawsuit from April 2023, which involved $2.9 billion in stock sales.
Filed in Delaware, the suit names CEO Brian Armstrong, board member Marc Andreessen, and other insiders. It alleges that while they cashed out billions, the market wasn’t informed about problems like weak anti-money-laundering controls and ongoing regulatory investigations.
Coinbase isn’t new to derivative lawsuits. In the earlier case, plaintiffs said Armstrong, Andreessen, and others avoided about $1 billion in losses by selling $2.9 billion of stock after the company’s 2021 direct listing.
In this latest filing, shareholders argue the insiders focused on lining their own pockets instead of helping Coinbase grow. The direct listing allowed immediate open-market sales, and plaintiffs say executives used that to maximize personal gain rather than raise capital for the company.
Coinbase’s board disagrees, calling the sales “normal attempts to monetize long-held investments” and pointing out that the company was “exceptionally well-capitalized” at the time. Still, plaintiffs highlight conflicts of interest, noting that a member of the company’s internal review committee is an angel investor in more than 50 Andreessen Horowitz-backed startups.
In their 72-page filing, the shareholders argue that Silicon Valley’s “insularity and patronage” makes impartial evaluation of claims against Andreessen unlikely.
Whether this ends up as another Silicon Valley drama or a serious push for accountability, Coinbase insiders are about to face another round of legal scrutiny — and shareholders are making sure the lights stay on.
