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Coinbase CEO and co-founder Brian Armstrong sold shares in the company the day before the US Securities and Exchange Commission (SEC) filed a complaint against the exchange for violating securities laws. The transaction caused a bit of a stir in the Twitter crypto universe, as Armstrong avoided serious losses in this way.
SEC records show that Armstrong sold 29,730 shares of the company on June 5, the day before the SEC lawsuit. Coinbase’s share price plummeted on the day the lawsuit was filed, initially dropping 20%.
Armstrong has been selling Coinbase stock regularly since November. He made trades under the 10b5-1 plan adopted in August, which predetermines the timing and size of trades.
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
Comparing Coinbase’s stock price to Armstrong’s trade dates shows that his trades weren’t always profitable. Thus, the deal could have been arranged before news of the SEC’s actions became known to Armstrong. On the other hand, the SEC may have known about Armstrong’s trading algorithm.
Armstrong reportedly lost 11.8% of his fortune the day after the SEC lawsuit against Coinbase, reducing his personal fortune to $2.2 billion. Armstrong was ranked 1409th in the ranking of the richest people in the world according to Forbes.
Related: ARK Invest Buys Coinbase Shares Same Day SEC Files Lawsuit
Dataroma statistics show that among company executives, only board members Tobias Lütke and Fred Ehrsam purchased shares in Coinbase last year. Armstrong and Ersam were defendants in a complaint filed by a Coinbase shareholder in May alleging that they and other Coinbase supporters sold shares in a public offering in April 2021 before the adverse financial information was disclosed and the share price fell 37 %.