A Delaware court has allowed a shareholder lawsuit against Coinbase CEO Brian Armstrong and board member Marc Andreessen to proceed. The suit alleges they used nonpublic information to sell shares worth hundreds of millions of dollars ahead of the company’s 2021 public listing. An internal company review found no misconduct, but the judge ruled questions about the investigating committee’s independence warranted moving the case forward.
A Delaware judge has declined to dismiss a shareholder lawsuit accusing Coinbase CEO Brian Armstrong and board member Marc Andreessen of insider trading. The case, allowed to proceed by Judge Kathaleen St. J. McCormick, centers on their stock sales around the company’s 2021 direct listing.
The lawsuit claims Andreessen Horowitz sold approximately $118.7 million in shares while Armstrong sold about $291.8 million. It alleges directors knew the company was overvalued and sold to avoid losses.
Coinbase had paused the lawsuit for a 10-month internal review by a special litigation committee. That committee recommended dismissal, finding the sales were limited and meant to ensure liquidity for the listing.
However, the plaintiff questioned the independence of committee member Gokul Rajaram due to past business ties. Judge McCormick agreed these connections raised valid concerns, though she noted no evidence of bad faith.
Coinbase and the executives have denied all allegations. The company stated it was disappointed by the court’s ruling and intends to vigorously defend against the claims.
