SEC Issues Wells Notice to Coinbase, Brian Armstrong Responds to Allegations of Insider Trading
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The co-founder and current CEO of Coinbase, Brian Armstrong, shared his thoughts on the SEC’s latest warning to the cryptocurrency exchange on possible securities law violations. Whether or not Armstrong sold out his investors based on prior knowledge of the Wells Notice, which sparked his share sell-off, is now the crux of the outrage in the community.
When Brian began selling off a significant portion of his Coinbase shares earlier this week, many analysts and traders questioned why he was doing it.
Armstrong reportedly sold $5.8 million worth of COIN stocks during that time, with about 50% of those sales occurring in the previous day. The data show that Armstrong sold about 30,000 shares for $2.24 million on March 21. On March 3 and 15, he sold another 60,000 shares for $3.56 million, making two further sales. The information shows that Armstong sold his equities when their prices were between $51 and $76.
According to Dataroma, sales of the exchange’s stock have generated $5.8 billion in profits for Coinbase officials and early investors. While this has been happening, just $86.9 million worth of Coinbase shares have been purchased by insiders. Tobias Lütke, a member of the exchange’s board of directors, and co-founder Fred Ehrsam made the transaction.
A Wells Notice typically comes before an enforcement action, and should the regulator target the exchange, its share price may decline noticeably.
Talking about the Wells notice, Armstrong said, “Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have applied to be listed on the platform.”
