Coinbase, a leading cryptocurrency exchange, has experienced a remarkable surge in its stock value, witnessing a nearly fourfold increase throughout the year. Notably, the market maneuvers of one insider, Fred Ehrsam, co-founder of Coinbase and Paradigm, have been particularly noteworthy, demonstrating a keen understanding of the market trends.
In the lead-up to Coinbase’s direct listing in April 2021, Ehrsam disclosed ownership of 17.7 million shares, distributed across five entities. Subsequently, a trust in Ehrsam’s name executed a strategic sale of over 1.4 million Coinbase shares shortly after the direct listing, yielding $472 million at an average price of $328.86 per share. Coinciding with this move, Coinbase’s stock plummeted by 90%, briefly dipping below $32 at the beginning of 2023.
In a recent development, Ehrsam’s trust sold an additional 81,530 shares at $106.94 each, securing $8.7 million. Forbes estimates Ehrsam’s personal fortune at $1.8 billion. Currently trading at approximately $128, Coinbase’s market capitalization has soared from an $8 billion valuation in January to over $30 billion, placing it just ahead of vaccine-maker Moderna and trailing behind Spotify.
Concurrently, Paradigm, where Ehrsam served as a managing partner until recently, has been strategically acquiring Coinbase shares. Paradigm One LP, with Ehrsam as a managing partner until last month, purchased more than 1.2 million Coinbase shares in trades conducted between May 2022 and May 2023. Acquiring the shares at an average price of $62.73 per share for a total of under $77 million, Paradigm One LP has seen paper gains exceeding 100%, with the current value of the holdings reaching almost $157 million.
It is noteworthy that Ehrsam entities, in line with disclosed trading plans registered with the SEC, now possess over 17.4 million Coinbase shares—nearly 99% of the initial share count, even after offloading a substantial portion post-Coinbase’s public debut. The disclosed transactions suggest a prudent mix of selling at the peak, buying at the trough, and realizing profits.
Meanwhile, Coinbase co-founder Brian Armstrong has been diligently fulfilling his commitment to sell 2% of his COIN stake to support various ventures, including ResearchHub, a decentralized science startup, and NewLimit, focusing on life extension. Armstrong has sold nearly 794,000 Coinbase shares since his initial pledge, garnering $53.7 million at an average price of $67.58 per share. Notably, if he had sold the entire batch at the current market value, Armstrong could have potentially amassed as much as $101 million.
In summary, the intricate dance of strategic trades by key insiders, especially Fred Ehrsam, within the volatile cryptocurrency market, underscores their ability to navigate and capitalize on the dynamic shifts in Coinbase’s stock value.
