Coinbase CEO and co-founder Brian Armstrong sold company shares the day before the United States Securities and Exchange Commission (SEC) filed a complaint against the exchange for securities law violations. The transaction caused a minor stir in the Twitter cryptoverse, as Armstrong avoided a sharp loss by doing so.
SEC records show that Armstrong sold 29,730 shares of the company on June 5, the day before the SEC suit. Coinbase’s share price plummeted the day of the suit, with an initial dip of 20%.
Armstrong has been selling Coinbase stock regularly since November. He has made the trades under a 10b5-1 plan adopted in August, which determines the timing and size of transactions in advance.
CoinBase CEO Brian Armstrong dumped 29,730 shares on June 5th, just a day before the SEC lawsuit was made public, and shares tanked 20%.
This should be illegal. ♂️
— WhaleWire (@WhaleWire) June 8, 2023
A comparison of Coinbase’s stock price with Armstrong’s trade dates shows that his trades were not always profitable. Thus, the trade could have been set up before the news of the SEC action was known to Armstrong. The SEC, on the other hand, could have been aware of Armstrong’s trading algorithm.
Armstrong had reportedly lost 11.8% of his net worth the day after the SEC action against Coinbase, bringing his personal wealth down to $2.2 billion. Armstrong has been ranked by Forbes as the 1,409th richest person in the world.
Related: ARK Invest buys Coinbase shares the same day SEC serves lawsuit
Dataroma statistics show that, among the company’s executives, only board members Tobias Lutke and Fred Ehrsam have purchased Coinbase stock in the last year. Armstrong and Ehrsam were defendants in a complaint filed by a Coinbase shareholder in May that alleged they and other Coinbase backers sold shares in a public offering in April 2021 before unfavorable financial information was disclosed and the share price fell by 37%.
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