Coinbase Wins Supreme Court Ruling As CEO Armstrong Continues Share Liquidation

In a 5-4 decision, the U.S. Supreme Court on Friday ruled in favor of Coinbase Global Inc COIN, reinforcing the prerogative of companies to direct customer and employee disputes into arbitration.

The judicial endorsement comes amid CEO Brian Armstrong’s sale of an additional $1.66 million in company shares reported earlier this week, totaling $3.38 million in June sales.

The CEO sold $1.78 million worth of shares filed on June 7, and an additional $1.66 million worth of shares, filed on June 22.

Check out Coinbase’s insider trades here.

The verdict, and Armstrong’s ongoing liquidation come alongside heightened regulatory scrutiny, particularly from the U.S. Securities and Exchange Commission (SEC).

The Supreme Court’s judgment stipulates that lawsuits filed in federal court must be suspended while a defendant pursues an appeal aimed at channeling the case into arbitration, according to Bloomberg.

Business groups, having rallied behind Coinbase, argue that allowing litigation to continue would incur unnecessary costs. On the other hand, consumer advocates say that judges should retain the discretion to determine which claims should progress during an appeal.

Coincidentally, Armstrong sold 29,730 company shares just one day before the SEC lodged a complaint against Coinbase for alleged securities law violations. The sale turned out to be opportune as share price's fell 20% following the lawsuit announcement.

Though, it’s worth noting that the transactions are part of a regular selling schedule set up by Armstrong since November under a 10b5-1 plan. And, the CEO admitted in October of last year that he planned to sell roughly 2% of his Coinbase holdings to fund scientific research.

The CEO owned about 16% of Coinbase at the time. As of Wednesday's filing after the second share sale, Armstrong’s stake in the crypto exchange currently stands at approximately 14.11% — an indication that he may be done selling shares.

In spite of regulatory challenges and unpredictable market dynamics, the Supreme Court’s decision will undoubtedly aid Coinbase as corporations usually prefer moving disputes out of courts and into private arbitration over litigation.

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Photo: Coinbase