History was made in 2021 when Coinbase (COIN) became the first crypto exchange to list on a US stock market. A shareholder is now demanding compensation from the exchange’s executives for allegedly mismanaging the company’s public listing, per a complaint filed in Delaware federal court.
Donald Kocher filed the case on Coinbase Global, Inc.’s behalf with the U.S. District Court in Delaware. Prior to the company’s direct listing in April 2021, it is alleged that the company’s management made “false and misleading claims” in the firm’s public filings. According to him, such remarks made it possible for investors to buy firm shares on the Nasdaq stock exchange without the use of middlemen like Wall Street investment banks.
Kocher charges nine current and former Coinbase executives, including board member and co-founder of the venture capital firm Andreessen Horowitz, Marc Andreessen, CEO Brian Armstrong, and chief financial officer Alesia Haas, with violating federal securities law, abusing their positions of authority, causing financial harm to the company, and “gross mismanagement.”
The case, which was submitted on August 4, claimed that “Coinbase’s business, goodwill, and reputation among its business partners, regulators, and shareholders have been significantly affected.”
In a case like this one, referred to as shareholder derivative litigation, a shareholder may bring an action against executives on the company’s behalf. Because Coinbase is publicly traded, it is possible to sue the company in this way. The latest in a series of legal cases that Coinbase investors have brought against the exchange recently.
Currently, the US SEC is investigating Coinbase for the possible sale of securities. This investigation has been made stronger by a second insider trading case involving a former Coinbase employee. Additionally, the crypto exchange is attempting to refer two other cases brought by irate investors to arbitration.