Coinbase Faces Shareholder Accusations of Insider Trading: Concealing High-Risk Points to Offload $4.2 Billion

Coinbase shareholders have sued Coinbase executives and directors in Delaware for concealing compliance loopholes, data breaches, and selling $4.2 billion worth of stock in advance. (Background: Bank of America collaborates to resist Coinbase's application for a trust license: high risk of liquidation) (Supplementary background: Monad only raised 70% of its target in 2 days of public sale! Is Coinbase Launchpad's debut a failure?) Just after the US Thanksgiving holiday, Coinbase faced a heavy lawsuit. Multiple shareholders recently filed a lawsuit in the Delaware Court of Chancery, accusing CEO Brian Armstrong and director Marc Andreessen of dumping a total of $4.2 billion worth of stock before exposing significant risks to the company, effectively shifting potential losses onto retail investors. The shareholders allege: concealing risks before dumping $4.2 billion The lawsuit states that insiders knew of the “Know Your Customer (KYC)” and “Anti-Money Laundering (AML)” program vulnerabilities at Coinbase and were aware of serious data leaks as early as January 2025, but only disclosed this information in May. The shareholders believe that this information vacuum artificially inflated the stock price, allowing management to cash out at a high point. According to the lawsuit documents, Armstrong and Andreessen sold a large amount of stock in the first and second quarters of 2025, resulting in a total cash-out amount of $4.2 billion. This is not the first time such controversy has arisen. As early as April 2023, Coinbase was sued for sweeping $2.9 billion in its first two days of direct listing. Shareholders emphasized, “This is not normal monetization, but rather profit from undisclosed regulatory and cybersecurity risks.” A representative of the plaintiffs stated outside the court: Information asymmetry should not become a cash machine for venture capital and executives. Internal investigation questioned; Silicon Valley's closed culture becomes the focus Coinbase had established a “special committee” to clear itself, deeming the transactions legal. However, shareholders revealed in a 72-page rebuttal document that the investigation's member Gokul Rajaram had investment dealings with over 50 companies backed by Andreessen Horowitz, and the law firm conducting the investigation had also worked for a16z. The plaintiffs criticized Silicon Valley's “closed circle and nepotism” as undermining the independence of the investigation. It is understood that Coinbase's shareholders are not only seeking billions in damages but also demanding seats on the company's board of directors and a greater say in board policies and guidelines to ensure future compliance oversight. Regardless of the final ruling, for investors, assessing a company's long-term value may hinge more on compliance transparency and management integrity than on the crypto market itself. Related reports: JPMorgan: Coinbase's proposed issuance of Base tokens could reach a market capitalization of $34 billion! Coinbase collaborates with Citigroup to promote stablecoin payments, and partners with Apollo to launch stablecoin-backed loans. The acquisition of Echo by Coinbase: Cobie's journey from entering the space at $200 to fame and fortune in 13 years. This article titled “Coinbase Sued by Shareholders for Insider Trading: Concealing Risks to Cash Out $4.2 Billion” was first published in BlockTempo, the most influential blockchain news media.