Coinbase has addressed what it calls “numerous pieces of misinformation spread about our investor and executive stock sales” after its direct NASDAQ listing earlier this month.
Coinbase went public on April 14 and soon rumors suggested senior execs and early investors had dumped vast amounts of stock — in some cases all of their shares.
Pundits and industry sites already debunked those claims shortly after they spread. However, Coinbase has seen fit to set the record straight with its own lengthly blog post.
In particular, Coinbase highlighted an “erroneous chart” shared on Twitter that claimed:
- Chief exec Brian Armstrong privately sold 71% of his total shares.
- Various senior execs sold between 63% and 100% of their shares.
- Union Square Venture Fund sold all of its shares.
Major gold bug and Bitcoin critic Peter Schiff later boosted those claims.
Insiders still sold $5B in stock after direct listing
Coinbase showed those stats are incorrect and posited the false info resulted from onlookers misunderstanding how direct stock listings work.
According to Coinbase, Armstrong sold less than 2% of his total outstanding equity (worth about $291 million) — not 71%.
Coinbase CFO Alesia Haas sold 15% of her stash ($99 million), not 100% as quoted in some reports.
- President and COO Emilie Choi sold 24% ($220 million).
- CPO Surojit Chatterjee offloaded 8% ($62 million).
- CAO Jennifer Jones sold 38% ($43 million).
Overall, insiders dumped a tad over $5 billion worth of stock in the eight days following the company’s direct listing.
Coinbase: Execs don’t dump, they create liquidity
With that cleared up, Coinbase turned to claims that the company used the direct listing as a get-rich scheme, rather than to bolster its operation.
Instead, Coinbase says insiders sold stock to “create liquidity” — understood to be code for “insiders needed to sell their stock and people wanted to buy it.”
“In direct listings, there are no new shares offered,” wrote Coinbase. “Existing shareholders need to sell portions of their total holdings to create a market, particularly in the first days of trading (as was the case here).”
“This is different from IPOs, where new shares are offered as part of the listing so investors and executives are not relied upon to sell any shares to create supply for new investors,” added Coinbase.
Coinbase then highlighted insiders from number of other tech companies that sold more or roughly the same amount of stock during their respective direct listings, including Slack, Roblox, and Palantir.
Coinbase stock currently trades for around $300, 20% up on its initial reference price but 30% below its record high set on opening day.