The cryptocurrency world was rocked on December 22, 2020, when the Securities and Exchange Commission (SEC) announced a lawsuit against Coinbase. The SEC claimed that Coinbase had sold unregistered securities worth over $1.3 billion. This news came as a surprise to many, including Coinbase CEO Brian Armstrong, who took to Twitter to defend the company’s actions.
Coinbase CEO’s Stock Sale
However, what really raised eyebrows was the fact that Armstrong had sold $291.8 million worth of Coinbase stock the day before the lawsuit was announced. Many in the cryptocurrency community saw this as a sign that Armstrong knew about the lawsuit beforehand and was trying to cash out before the news became public.
Was the Stock Sale Planned?
Coinbase has denied that the stock sale was planned and that Armstrong did not have any insider information about the lawsuit. In a statement, the company said that Armstrong had set up a pre-arranged trading plan back in November, which set the parameters for his stock sales. According to the statement, “all trades were executed in accordance with the plan.”
The SEC’s investigation into Coinbase’s actions has been ongoing for some time, and it is possible that Armstrong was aware of this. However, the company insists that the timing of the stock sale was purely coincidental and that it was not related to the lawsuit.
While it is impossible to know for sure whether or not the stock sale was planned ahead of time, Coinbase’s statement does seem to suggest that it was not. Regardless, the situation has raised questions about insider trading and the ethics of selling stocks just before negative news is announced. It is likely that this will not be the last time we see a situation like this in the cryptocurrency world.