Coinbase Top Executives Sold Millions of Shares, But Just a Fraction of Their Total Holdings

And that is how a direct listing works. The shares sold were just the exercised options and part of Class A common stock. Class B shares are the ones with 20x more voting rights and are convertible at any time into one share of Class A common stock.


Over the weekend, besides the market crash, the talk of the town was the insider sales of COIN shares.

On Wednesday last week, Coinbase made its debut on Nasdaq, opening at almost $430 high. But soon, it dropped to $328, and though it saw a small jump to $342 given that the crypto market had a rough weekend, it is looking to open lower today.

The largest cryptocurrency exchange in the US went public through a direct listing route which doesn’t intend to raise any new capital and has no lock-up period on investor shares.

In the week of listing, Coinbase CEO Brian Armstrong sold 1,050,000 of his COIN shares; co-founder Fred Ehsram sold 2,623,242 shares, venture capitalist Marc Andreessen 5,997,283 shares, director Fred Wilson 13,902,324 shares, and Emilie Choe 219,309 shares.

In total, about $5 billion in shares were sold by Coinbase insiders and investors during the first day of trading, according to the filings made with the US Securities and Exchange Commission (SEC).

While many questioned this selling, they failed to acknowledge that this is exactly how a direct listing works. It was by this selling of insiders and investors that shares are made available in the market.

If we take a look at the S-1 form filed by the company, these shares have been a very small percentage of their original holdings. Armstrong actually sold less than 2%. The highest was 38% by chief account officer Jennifer Jones.

There are two classes of common stocks, Class A and Class B, where the right of both the holders are identical except that each share of Class A common stock is entitled to one vote while each share of Class B common stock is entitled to twenty votes and is convertible at any time into one share of Class A common stock.

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The CEO of rival exchange Binance, Changpeng Zhao, also chimed in on the ruckus created by the tweet claiming that the Coinbase executives sold nearly all of their shares when it was just a fraction of the total shares they hold, saying that the Binance team hasn’t sold a single BNB in these four years. “CZ” said,

“Binance team had an allocation of 40% of the total supply of BNB from the ICO days, which is worth just over $37 billion at today's (dropped) prices. We have not sold a single BNB so far and never intend to. We will burn it all.”

He later clarified in a separate tweet that he is not against people cashing out, especially after Coinbase worked hard for nearly a decade to build “a path for others to follow, and a milestone for the industry.”

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