Coinbase CEO nearly done selling 2% stake to fund other startups

Coinbase CEO Brian Armstrong has almost fulfilled a pledge to sell 2% of his company stake to fund other startups.

Armstrong sold nearly 27,600 COIN shares last week, raking in $2.9 million. That brought the total since his announcement to 681,672 shares, generating $42.4 million for the crypto billionaire.

• Armstrong’s Coinbase stake amounted to 39.6 million shares per the company’s 2022 proxy statement (18% of the company with 59.5% voting power).
• 2% represented about 792,000 shares.
• Armstrong has now offloaded 86% of that target.

Averaged out, Armstrong has so far sold COIN for $62.15 per share. The co-founder said he’d direct the funds to other endeavors “like NewLimit and ResearchHub.” 

Armstrong co-founded both startups. NewLimit is a life extension gambit and ResearchHub is a crypto-powered crowdfunding platform for scientific research. Armstrong’s net worth is estimated at $4.3 billion.

Coinbase stock traded at $64 when Armstrong made his pledge last October. The stock’s value had fallen 50% to a low of $31.55 by January before multiplying to $105 as of today. Blockworks has reached out to Armstrong for comment.

Those averaged figures don’t include Armstrong’s monster sale on the stock’s direct listing in April 2021. The CEO cashed in 750,000 shares for $291.8 million — working out to $389.10 per share. Coinbase stock has since lost almost three-quarters of its value.

Two Coinbase insiders bought the dip

Armstrong’s sales were significant but other company insiders sold more, altogether over $5 billion in company stock across COIN’s first two days of trade. 

Early investor and board director Fred Wilson and his firm Union Square Ventures made up nearly three-quarters of the total sold. 

Direct listings like the one Coinbase undertook differ from initial public offerings in that no new shares are created. Company insiders must sell shares on public markets as part of the direct listing process.

To date, only two Coinbase insiders have bought any Coinbase stock since it went public, per OpenInsider data, which collates SEC filings.

• Co-founder Fred Ehrsam’s fund Paradigm spent $128.9 million on 1.93 million shares ($65.67 average), with trades made in May 2022 and May 2023.
• Shopify CEO Tobias Lütke, a Coinbase board member, bought more than 183,300 shares for $10 million ($54.93 average) between August 2022 and February 2023.
• Both are well up on their buys to date (Ehrsam is up nearly 60%, Lütke almost 90%). 

Ehrsam, whose net worth is placed at $1.5 billion, is even further ahead. Ehrsam’s trust unloaded 1.5 million COIN shares between its direct listing and Dec. 2021 for an average price of $382.20. 

Those sales brought in more than $492 million —- almost four times what Ehrsam’s fund has spent buying the dip on Coinbase stock.

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