Coinbase Insiders, Including the CEO, Used Insider Trading to Avoid $1 Billion Losses
A Coinbase insider recently filed a new lawsuit naming Coinbase (NASDAQ:COIN) insiders, including chairman and CEO Brian Armstrong, for using insider trading to avoid losses of $1 billion during the public listing of the shares two years ago. .
The investor filed the complaint on Monday, May 1, in the Delaware Chancery Court. Furthermore, the investor argues that the company’s board opted for direct listing rather than a typical public listing through an initial public offering. Additionally, Coinbase promptly sold $2.9 billion worth of stock before Coinbase management later revealed: “material negative information that has shattered market optimism since the company’s first quarterly earnings release.”
In the derivatives claim filed in the Delaware court, the investor seeks the return of “illicitly obtained profits” from Coinbase co-founder Brian Armstrong. The lawsuit also names other Coinbase executives, along with venture capital giant co-founder Andreessen Horowitz.
Coinbase and Customer Privacy Violations
On Monday, another lawsuit was filed against Coinbase in federal court in San Francisco. The lawsuit accesses Coinbase to collect fingerprints and facial models from customers for violating Illinois biometric privacy law.
The lawsuit mentions that Coinbase collected facial data from government-issued IDs and selfies that customers uploaded during the registration process. He also notes that Coinbase collected the fingerprint data after customers had logged into their accounts using fingerprint scanning technology.
Under the Illinois Biometric Information Privacy Act, companies must obtain customer consent before collecting biometric data. They must also let customers know how long they intend to keep the information.
The complaint states, “Coinbase has created, collected and stored thousands of ‘face models’ (highly detailed geometric maps of the face) and fingerprints of countless Illinois residents.”
The lawsuit adds that Coinbase’s collection and storage of this data would expose users to “serious and irreversible privacy risks” such as identity theft in the event of a data breach.
The development comes at a time when Coinbase and the US SEC are embroiled in a legal battle. Coinbase recently filed a lawsuit against the SEC for delaying the regulation petition and not providing enough clarity on cryptocurrency regulations.