Coinbase Shareholder Files Lawsuit against Exchange over Mismanagement of Public Listing

Coinbase is currently facing a new lawsuit from a shareholder who alleges that the crypto exchange misled shareholders over its public listing. According to the aggrieved shareholder, Donald Kocher, Coinbase mismanaged its public listing. Kocher also alleges that the Brian Armstrong-led company made “false and misleading statements” in its public filings ahead of its April 2021 direct listing. Furthermore, Kocher claims that the misleading statements allowed investors to purchase company shares on the Nasdaq stock exchange.

Kocher also accused execs of infractions. Mentioned culprits include Armstrong, Coinbase chief financial officer Alesia Haas, and board member Marc Andreessen. The list also includes six other former and current company officers. These include violating federal securities law, abusing their power, causing financial harm to the firm, and “gross mismanagement.”

As a result of all these allegations, the aggrieved shareholder seeks damages from the nine company executives and board members. A statement in the Coinbase shareholder lawsuit complaint filed with the US District Court in Delaware on August 4th read:

“Coinbase’s business, goodwill and reputation with its business partners, regulators and shareholders have been gravely impaired.”

Coinbase Shareholder Lawsuit on the Rise

The current lawsuit is the latest in a series of litigations taken against Coinbase by its investors in recent months. For instance, last Thursday, shareholders filed a class action lawsuit in the US District Court of New Jersey against the exchange. One of the listed grievances is that Coinbase allowed US persons to trade unregistered securities on its platform. An excerpt from the filing read:

“Coinbase allowed Americans to trade digital assets that Coinbase knew or recklessly disregarded should have been registered as securities with the SEC… the foregoing conduct subjected the Company to a heightened risk of regulatory and governmental scrutiny and enforcement action…as a result, the Company’s public statements were materially false and misleading at all relevant times.”

Coinbase Insider Trading Case

As mentioned in the class action filing, Coinbase is currently being investigated by the Securities and Exchange Commission (SEC). The regulatory agency is probing to determine whether the leading crypto exchange allowed US persons to trade unregistered securities. According to a Bloomberg report, the SEC is taking a closer look at the alleged listed tokens, which is also separate from an unrelated Coinbase insider trading case. The latter entails the SEC and Department of Justice (DOJ) accusing a former Coinbase product manager and at least two cohorts of insider trading and wire fraud.

According to the SEC, Ishan Wahi, his brother Nikhil Wahi, and an associate Sameer Ramani all conspired to exploit the system. Former Coinbase manager Ishan shared listing announcements in advance to his brother Nikhil and friend Sameer Ramani. These included several listing announcements for over 25 digital currencies, which Ishan’s cohorts traded on before announcements went live. In the process, the complicit duo made over $1.1 million in profits.