A Delaware judge has permitted a shareholder lawsuit against Coinbase directors, including CEO Brian Armstrong and board member Marc Andreessen, to move forward. The suit alleges insider trading tied to over $2.9 billion in stock sales around the company’s 2021 direct listing. While an internal investigation cleared the executives, the judge cited questions about a committee member’s independence. Separately, new allegations have emerged about potential insider trading related to Coinbase‘s token listing process.
A Delaware judge has allowed a shareholder lawsuit accusing several Coinbase directors of insider trading to proceed. The case alleges executives used confidential information to sidestep over $1 billion in losses by selling shares around the company’s 2021 public debut.
Shareholders accuse directors, including CEO Brian Armstrong and board member Marc Andreessen, of selling more than $2.9 billion worth of stock. The complaint states Armstrong personally sold about $291.8 million, while Andreessen Horowitz sold roughly $118.7 million in shares.
On Friday, Delaware Chancery Court Judge Kathaleen St. J. McCormick rejected a request to dismiss the suit. The judge noted that a special litigation committee’s findings presented a strong defense but ruled that questions about one member’s independence were enough to keep the case alive.
The lawsuit centers on Coinbase‘s decision to go public through a direct listing, which lacked a lockup period. This allowed existing shareholders to sell immediately without issuing new shares that could dilute ownership.
Coinbase and the defendants have denied all allegations, arguing there is no evidence they acted on material nonpublic information. The company reportedly stated it was “disappointed by the court’s decision” and vowed to fight the “meritless claims.”
The special committee conducted a 10-month review, concluding the sales were limited and aimed at providing liquidity. It argued the share price tracked Bitcoin‘s movements, rejecting claims the trades used insider knowledge.
However, the shareholder challenged the committee’s independence, pointing to past business ties between a member and Andreessen‘s firm. Judge McCormick agreed those connections raised legitimate concerns but acknowledged no suggestion of bad faith.
Meanwhile, new allegations of insider trading have surfaced after researchers claimed certain traders profited from advance knowledge of token listings. The claims suggest blockchain data and technical signals may have been used to anticipate which assets the exchange would list.
In response, Coinbase said it plans to adjust its token listing process over coming quarters. The stated goal is to reduce information leaks and uneven access to market signals.
