Coinbase Insiders Plan to Dump Staggering $900M in Stock: Report

Coinbase Global, a popular US-based cryptocurrency exchange, recently had its executives and directors adopt trading plans to sell shares worth over $900 million. Coinbase’s platform enables users to trade and store digital assets.

As reported by MarketWatch, these plans permit three executives and two directors to sell a collective total of up to five million shares, ensuring that trades are executed independently of any insider information.

The “Rule 10b5-1” Plan

Coinbase co-founder and CEO Brian Armstrong established a Rule 10b5-1 plan on August 15, which enables him to sell up to 3.75 million Class A shares by converting his Class B shares. 

For context, a Rule 10b5-1 plan is a scheduled trading plan that lets company insiders, like executives, buy or sell their stock without breaking insider trading laws. By setting rules for trades ahead of time, these plans allow transactions to happen automatically, even if the insider later has non-public information. This helps insiders manage their stock and avoid any claims of trading based on confidential information.

As of March 31, Armstrong held 52% of Coinbase’s voting power, mainly through his Class B shares, which have 20 votes each compared to one vote per Class A share traded on the Nasdaq. By converting some Class B shares into Class A shares, he can access liquidity through public sales while retaining significant influence with his remaining Class B shares.

Insiders to Sell Shares

Coinbase disclosed these trading plans in an October 30 filing with the US Securities and Exchange Commission (SEC). 

According to MarketWatch, Armstrong’s plan starts on November 18 and may extend until November 14, 2025. He last converted and sold 15,375 shares on September 12, earning $2.5 million at an average price of $161.28 per share.

In addition to Armstrong’s plan, Chief Financial Officer Alesia Haas also adopted a trading strategy on August 29. Her plan covers up to 153,896 Class A shares and the costs associated with stock options for up to 686,873 shares. The plan takes effect on January 2, 2025, and concludes on December 31, 2025.

Other insiders, including co-founder Frederick Ehrsam and Chief Legal Officer Paul Grewal, set up their plans in August. Coinbase director Fred Wilson’s plan, also filed in August, is set to begin November 7, 2024. 

So far this year, Coinbase stock (COIN) has risen 5.1% trading at 182.88 as per Google Finance.