Judge Denies Motion to Dismiss, Coinbase Directors' Insider Trading Lawsuit to Proceed

WILMINGTON, Del. — A Delaware judge ruled Friday that a shareholder lawsuit alleging insider trading against several Coinbase Global Inc. directors—including venture capitalist Marc Andreessen and CEO Brian Armstrong—can proceed, rejecting a bid to dismiss the case over a perceived conflict of interest by an internal investigation committee member. Shareholders filed the suit in 2023, accusing the directors of selling more than $2.9 billion in stock during Coinbase’s 2021 direct listing (a process that skips new share issuance, avoids dilution, and has no lock-up period for existing investors) using confidential information to avoid over $1 billion in losses. Coinbase founder and CEO Brian Armstrong, who has led the crypto exchange since 2012, sold $291.8 million in shares, per the complaint. Andreessen, a board member since 2020, sold $118.7 million via his firm Andreessen Horowitz. Plaintiffs argue directors knew the stock was overvalued based on confidential valuation data, prompting the sales. Judge Kathaleen St. J. McCormick denied the dismissal motion from the internal committee but noted the directors may still prevail, as the Special Litigation Committee’s report “paints a persuasive narrative” supporting their defense. Directors’ attorneys denied any insider trading, saying plaintiffs failed to prove the defendants possessed material nonpublic information or that such information drove their share sales.