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The digital currency ecosystem is currently riled up over Brian Armstrong, the chief executive officer of Coinbase Global Inc, for actions that look like insider trading. Earlier this week, many analysts pointed out that Brian had been selling off a massive amount of his Coinbase shares, with many questioning what the purpose was.
JUST YESTERDAY COINBASE CEO REPORTED SELLING MILLIONS IN COINBASE $COIN SHARES ( PART OF HIS 10B5-1)
— GURGAVIN (@gurgavin) March 22, 2023
TODAY COINBASE SAYS IT RECEIVED A WELLS NOTICE FROM THE SEC
THE STOCK IS DOWN ALMOST 15% TODAY pic.twitter.com/gHj5e9YGyH
As if to brighten the perceptions of observers, the exchange revealed that it received a Wells Notice from the United States Securities and Exchange Commission (SEC) with respect to offerings of securities as it relates to its Earn Program. Typically, a Wells Notice precedes an enforcement action, and should the regulator come at the exchange, its share value may plunge significantly.
The fury in the community now hinges on whether or not Armstrong sold out his investors based on prior knowledge of the Wells Notice that fueled his share sell-off. Although the Wells Notice was presumably issued on March 22 and sales of the shares date back to March 3, many are not convinced that there was no prior knowledge somewhere.
Alex DovbnyaAs if it were a coordinated action, both Paul Grewal and one of Coinbase's biggest backers, Ark Invest, also sold a sizable chunk of the firm's shares before the SEC move was made known.
Coinbase shares outlook
There has been a lot of speculation that the U.S. SEC is set to deepen its crackdown on crypto exchanges earlier this year when it fined Kraken $30 million for offering unregistered staking products.
With Coinbase as the next major face of crypto in the U.S. following the collapse of FTX.US, the crackdown seemed inevitable, perhaps justifying the early sell-off of shares by Brian.
At the time of writing, Coinbase shares are down by more than 17% over the past 24 hours, with a likely steeper decline expected if the case drags on.
Alex Dovbnya
Yuri Molchan
U.Today Editorial Team
Vladislav Sopov
Dan Burgin