- A shareholder has filed a derivative lawsuit against Coinbase executives on the company’s 2021 public listing.
- The suit alleges that mismanagement disrupted Coinbase’s “flywheel” growth strategy to the detriment of investors.
- The lawsuit, if it succeeds, could pay damages to CEO Brian Armstrong and other executives to Coinbase itself.
Share this article
Crypto exchange Coinbase is facing a derivative lawsuit from a disgruntled shareholder over its 2021 stock listing.
coinbase face derivatives suite
A Coinbase shareholder has filed a lawsuit against the company.
The filing alleges that Coinbase misrepresented various facts and engaged in gross mismanagement prior to obtaining a direct listing on the stock exchange in April 2021. Specifically, the filing complains that Coinbase previously generated a “massive influx” on its exchange through a massive advertising campaign. its listing. This caused an “unprecedented spike” in activity and caused service disruptions.
This sudden increase, in turn, sabotaged the company’s “flywheel” growth strategy to the detriment of its investors. According to the filing, Coinbase’s efforts to increase its user count “backfire, except”. [the company] And its newly found investors are damaged and vulnerable to competition.”
In addition to those complaints, the lawsuit also alleges that Coinbase’s public listing violated securities regulations. This prompts a securities action from the US Securities and Exchange Commission, intended to determine whether clients were allowed to trade unregistered securities.
Today’s filing targets CEO Brian Armstrong, CFO Alessia Haas and Chief Accounting Officer Jennifer Jones. Additionally, directors Fred Ehrsam, Mark Andreesson, and Katherine Hawn, Gokul Rajaram and Fred Wilson are listed as defendants.
The lawsuit was put forward by shareholder and plaintiff Donald Kochhar. Although Kochhar’s relationship with Coinbase is unclear, the lawsuit is a derivative suit, meaning it seeks to pay damages to the authorities to Coinbase itself.
The filing was submitted to the US District Court for the District of Delaware. Several other lawsuits have been filed in connection with Coinbase’s IPO over the past year, including one in New Jersey and one in the Northern District of California.
General discontent among investors may be due to the falling value of the company’s stock. COIN was priced at $342 when it was listed in April 2021; Now its value is $87.68.
Disclosure: At the time of writing, the author of this article owns BTC, ETH and other cryptocurrencies.