Amid reports of a selloff of Coinbase shares worth $1.6M+ by CEO Armstrong, “The Black Swan” author Nassim Taleb has advised investors to leave Coinbase, dubbing it a “sinking ship.”
Nassim Nicholas Taleb, notable Lebanese-American mathematical statistician and author of “The Black Swan,” has advised investors and customers to leave Coinbase amidst reports of a selloff of Coinbase shares worth $1.6M+ by CEO Brian Armstrong.
Recently, reports surfaced indicating that Armstrong had sold off about 29,732 Class A Coinbase shares worth $1,625,102 on November 11. The data was disclosed in a Coinbase filing with the U.S. Securities and Exchange Commission (SEC). Additionally, Armstrong made a conversion of Class B shares to Class A.
Taleb believes this move indicates looming danger surrounding Coinbase, as he warns the public against investing in the company. ‘Take what you can out of the sinking ship. In the real world, that is, pre-crypto, a CEO never sells his or her own shares while shouting “all is OK,”‘ Taleb remarked in a tweet Thursday.
Take what you can out of the sinking ship. In the real world, that is, pre-crypto, a CEO never sell his or her own shares while shouting "all is OK". A CEO selling shares expresses such a loss of confidence in the company it is taken extremely seriously. pic.twitter.com/tzqnIwjd8q
— Nassim Nicholas Taleb (@nntaleb) November 17, 2022
Speaking further, Taleb mentioned that the sales of a company’s shares by a CEO is suggestive of a lack of confidence in the firm on the CEO’s part, which investors should take very seriously, as it could indicate that the firm might be having some issues. Taleb also noted that the fact that it is a tiny portion is the most worrisome part of it. Taleb’s concerns come when the crypto space is experiencing a contagion triggered by the FTX collapse.
In response, co-founder of Ethereum, Vitalik Buterin, disproved Taleb’s assertions of trouble in paradise for Coinbase as a reason behind Armstrong’s sale. Buterin highlighted the “psychological stress” involved with having almost all of one’s net worth in one illiquid asset.
The Russian-born Canadian programmer further noted that diversifying one’s portfolio is prudent and making it is no harm. Buterin added that the mental ease from such diversification could contribute to productivity in the workspace.
“There is absolutely nothing wrong with some diversification, and the sanity boost from diversifying can even improve work performance,” he said.
Recall that barely a week after Coinbase went public on Nasdaq, making it the first cryptocurrency exchange to do so, reports surfaced, revealing that Armstrong sold Coinbase shares worth about $291M on the debut day. A filing with the SEC indicated that Armstrong sold 749,999 shares in three batches.
Notwithstanding, it is important to note that last month, Armstrong revealed his plans to sell off about 2% of his Coinbase shares, with the proceeds heading towards funding scientific research.
Notably, Shopify CEO Lutke Tobias, who joined Coinbase’s board of directors in January, has been on a Coinbase buying spree ever since. Coinbase (COIN) currently trades at 46.76 against the dollar at the time of reporting, down 4.33% in the past 24 hours. Due to the global financial situation, COIN has dipped by 86.52% in the past year.