Coinbase (NASDAQ:COIN) stock is in full focus today following a massive insider buy from co-founder and Director Fred Ehrsam III via his living trust, Paradigm Fund and Paradigm One. On May 9 and May 10, Paradigm reported purchasing 810,000 shares of COIN stock at average prices between $59.32 and $63.23. In total, the transaction was worth a whopping $50.03 million.
Following the purchases, Ehrsam now owns a total of 5.65 million shares through his living trust, Paradigm Fund and Paradigm One. The U.S. Securities and Exchange Commission (SEC) filing showing his purchase, called a Form 4, notes that “The Frederick Ernest Ehrsam III Living Trust and Matt Huang are the managing members of Paradigm One GP LLC.”
This buy was Paradigm’s first interaction with COIN stock in almost a year. Excluding the recent purchase, Paradigm’s last transaction with the company was dated May 24, 2022. On that day, the trust disclosed purchasing 30,030 shares worth $1.81 million.
Coinbase Co-Founder Fred Ehrsam’s Paradigm Buys $50 Million of COIN Stock
On the other hand, CEO Brian Armstrong has been steadily selling out of his COIN stake. A look at his recent transactions shows a prevailing theme of converting Class B common stock into Class A common stock. Following the conversion of shares, Armstrong has then immediately sold out of his Class A common stock using a prearranged 10b5-1 plan on several occasions. As of May 8, the CEO still owns 33.19 million shares of Class B common stock that are convertible to Class A common stock on a 1:1 basis.
Sales by co-founders Ehrsam and Armstrong and other executives have drawn scrutiny in the past. Following Coinbase’s direct listing, Armstrong sold 749,999 shares at prices between $381 and $410.40. In total, the sale was worth about $291.8 million. According to The Wall Street Journal, four Coinbase executives — including Armstrong and Ehrsam — received proceeds of $1.2 billion on Coinbase’s first day of trading. Today, COIN stock trades at just below $60, a far cry from its initial direct listing price.
Still, Paradigm’s recent purchase is a stamp of confidence for Coinbase’s long-term opportunities. Last month, it was announced that Coinbase had sued the SEC due to its silence on crypto regulation policy questions. Coinbase had previously petitioned the regulatory agency to “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
