Coinbase insiders appear to have little faith that their company will be worth more in the future than it’s worth right now, a stance that should concern anyone who bought shares in the cryptocurrency exchange in 2021.
Public filings reveal that, as of January 6, Coinbase insiders had issued 703 sell orders worth a combined $5,796,792,858 since the company’s direct listing on the Nasdaq exchange last April. Over that same period, no insider purchased even a single additional share of Coinbase. Not one. Nada. Zip. Zilch. Zero.
Leading this sell-off tsunami was Frederick Wilson, a prolific financier of technology startups, who cashed out a total of just over $1.8 billion on April 16. A division of Union Square Ventures, a fund Wilson co-founded with Brad Burnham, sold an identical sum the same day.
Third on the exit ramp was Ehrsam Frederick Ernest III, co-founder of both Coinbase and crypto investment firm Paradigm, who has steadily unloaded over $492 million since last April. Fourth was Marc Andreessen with over $311 million in personal sales, although three affiliated funds—Andreessen Horowitz LSV ($122.6 million), a16z ($122.6 million) and AH Equity Partners III ($118.6 million)—were also significant sellers.
As for Coinbase’s executive branch, President Emilie Choi sold $235.5 million of her holdings as of January 6, while Chief Product Officer Chatterjee Surojit wasn’t far behind with $172.2 million. Chief Financial Officer Alessia Haas was a little further down the list with $99.3 million.
Director Katie Haun, who recently left her role as an a16z general partner to form her own crypto VC fund, sold over $82 million of her Coinbase shares. Chief Legal Officer Paul Grewal ($64.8 million) and Chief Accounting Officer Jennifer Jones ($50 million) rounded out the insider sales chart. Since August 18, all insider sales have been limited to Choi, Ehrsam, Grewal, Haun, Jones and Surojit.
The other FOMO (fear of Miami outcome)
While in most cases the sales listed above don’t represent the entirety of the principals’ stakes in Coinbase—with the notable exception of Haun, who appears to have sold off nearly 95% of her holdings—it’s worth considering that Coinbase’s retail investors likely haven’t been as fortunate as those who had buckets to sell on day one.
After charging out the Nasdaq gate amidst a flood of media attention, Coinbase shares lost nearly half their opening day price of $381 by mid-May. Since then, the shares have ebbed and flowed with the fickle fiat value of major crypto tokens, briefly topping $357 during last November’s bubble before crashing once again, closing out last week’s trading at just over $232.
Haun’s near-total divestiture stands in stark contrast to quotes she gave to TechCrunch at the time of Coinbase’s listing. Then, Haun said Coinbase was “very well-positioned … to capitalize on all kinds of different behaviors in the crypto economy that we don’t even yet know about.” Despite Coinbase allegedly sitting in crypto’s catbird seat, Haun apparently saw less value in sitting on her shares than selling.
Haun sold her final tranche of Coinbase shares on November 23, the day before the jury in the Kleiman v Wright civil trial began their deliberations. That Florida trial, which Ira Kleiman brought based on the claim that his brother Dave helped Wright create and mine Bitcoin, resulted in a win for Wright as the jury declared that Dave Kleiman hadn’t played a major role in Bitcoin’s creation.
As a Coinbase director, Haun would have been well aware that the ‘material risk’ section of the company’s Nasdaq prospectus stressed the danger that the exchange could face if the world discovered the real-world identity behind the Satoshi Nakamoto pseudonym credited with authoring the 2008 Bitcoin white paper. Over $164m of Coinbase stock was sold off by insiders during the trial. Just saying.
Live long and profit
Coinbase CEO Brian Armstrong has so far unloaded nearly $292 million worth of his company holdings, although those sales were conducted the same week the exchange made its Nasdaq debut. Armstrong used some of the proceeds shortly before Christmas to buy a $133 million mansion in Los Angeles (the gates to which probably now feature signage reading ‘not your keys, not your house’).
Armstrong’s sales represent a tiny fraction of his holdings in the company he co-founded, and perhaps he figures that if Coinbase ever went truly south, he’ll still have loads of time in which to start over. Just before Christmas, Armstrong announced the formation of a new company, NewLimit, that aims to “radically extend human healthspan” through something called ‘epigenetic reprogramming.’
Lest anyone stop to marvel at the idea of a tech bro suddenly embracing altruism, NewLimit’s co-founder Blake Bryce reassured potential investors that the start-up was focused on becoming “an ambitious, well-run, for-profit company that will deliver revenue-generating products.” Maybe some of Coinbase’s early retail investors who avail themselves of NewLimit’s technology might live long enough see their Coinbase shares regain their original value someday. But we doubt it.
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