David Canellis

Coinbase stock is on a tear.&nbsp;



Its share price has nearly quadrupled this year, and funds revolving around one particular insider have played the market almost perfectly. Along the way, trusts and funds linked to Coinbase and Paradigm co-founder Fred Ehrsam have so far sold the top, bought the bottom and even taken profits.



Ehrsam initially <a href="https://www.sec.gov/Archives/edgar/data/1679788/000162828021003168/coinbaseglobalincs-1.htm">disclosed</a> ownership of 17.7 million shares leading up to Coinbase’s direct listing in April 2021, split across five entities.



Ehrsam, through a trust in his name, initially sold a little more than 1.4 million <a href="http://blockworks.co/tag/coinbase">Coinbase</a> shares in the months following the company’s direct listing.



The trust netted $472 million with those trades, averaged out to $328.86 per share. <a href="https://blockworks.co/price/coin">COIN</a> would go on to fall 90% from there, briefly sinking below $32 at the start of 2023.



Last week, the trust <a href="http://www.sec.gov/Archives/edgar/data/1679788/000120919123056654/xslF345X03/doc4.xml">sold</a> another 81,530 shares for $106.94 a pop, raking in $8.7 million. Forbes <a href="https://www.forbes.com/profile/fred-ehrsam/">puts</a> Ehrsam’s personal fortune at $1.8 billion.&nbsp;



Coinbase stock sits at about $128 today. What was an $8 billion crypto company in January is now worth more than $30 billion, trailing Spotify but slightly ahead of vaccine-maker Moderna.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/15924739/embed#?secret=U7c85I4sAz" data-secret="U7c85I4sAz" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Diamonds are buys, circles are sales</figcaption></figure>



Meanwhile, <a href="https://blockworks.co/tag/paradigm">Paradigm</a> has been buying (as has board member and <a href="https://blockworks.co/news/shopify-ceo-spends-3m-on-coinbase-stock-in-2-months">Shopify CEO Tobias Lutke</a>).



Paradigm One LP, of which 35-year-old <a href="https://blockworks.co/tag/fred-ehrsam">Ehrsam</a> was a managing partner until he <a href="https://www.bloomberg.com/news/articles/2023-10-24/paradigm-s-ehrsam-relinquishes-managing-partner-role-at-crypto-focused-vc-firm#xj4y7vzkg">stepped</a> back last month, scooped up more than 1.2 million Coinbase shares across trades made in May 2022 and May 2023.&nbsp;



That’s nearly the same amount of shares that Ehrsam’s trust sold following Coinbase’s direct listing. Paradigm One paid under $77 million for the haul, buying at $62.73 per share on average.&nbsp;



Those shares are currently worth almost $157 million, paper gains of more than 100%. The fund hasn’t yet sold any Coinbase stock, per OpenInsider which compiles US Securities and Exchange Commission filings.&nbsp;



<h2 class="wp-block-heading">Brian Armstrong has sold 2% of his Coinbase stake</h2>



It’s worth stressing that the buying and selling has been split between Paradigm One and Ehrsam’s trust — technically separate entities sold the top, bought the bottom and took profits.&nbsp;



(Most of Ehrsam’s transactions were in line with trading plans lodged with the SEC ahead of time.)



But overall per his disclosures, Ehrsam entities now own a little more than 17.4 million Coinbase shares — almost 99% of his share count before offloading nearly half-a-billion dollars in stock after Coinbase went public. And he has a cool $400 million to boot.



All this while his Coinbase co-founder Brian Armstrong has been <a href="https://blockworks.co/news/coinbase-ceo-stocks-stake">busy fulfilling his pledge</a> to sell 2% of his COIN stake to fund other ventures, including decentralized science startup ResearchHub — which helps <a href="https://blockworks.co/news/brian-armstrong-tokens-for-science">pay researchers in cryptocurrency to do science</a> — and life extension play NewLimit.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I&#39;m passionate about accelerating science and tech to help solve some of the biggest challenges in the world. To further this, I&#39;m planning to sell about 2% of my Coinbase holdings over the next year to fund scientific research and companies like <a href="https://twitter.com/newlimit?ref_src=twsrc%5Etfw">@newlimit</a> + <a href="https://twitter.com/ResearchHub?ref_src=twsrc%5Etfw">@researchhub</a>&mdash; Brian Armstrong 🛡️ (@brian_armstrong) <a href="https://twitter.com/brian_armstrong/status/1581099147855155200?ref_src=twsrc%5Etfw">October 15, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



As of last week, <a href="https://blockworks.co/tag/brian-armstrong">Armstrong</a> has sold nearly 794,000 Coinbase shares since his initial tweet — more than 2% of his COIN stake disclosed to the <a href="https://blockworks.co/tag/sec">SEC</a> in 2021.&nbsp;



Armstrong pulled in $53.7 million with those trades, which averaged out to $67.58 per share. Had he sold the full batch today, Armstrong could’ve made as much as $101 million.



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Coinbase co-founder’s funds are really good at trading Coinbase stock

Katherine Ross

Paradigm’s Fred Ehrsam announced on Tuesday that he’s moving to General Partner from Managing Partner.



“This change allows me to carve out some time to explore areas of science that are of personal passion for me,” Ehrsam said in a <a href="https://twitter.com/FEhrsam/status/1716849137218732119?s=20">post</a> on X. “I have personally been investing in and supporting bio research for several years and am excited to ramp up these efforts.”



Paradigm co-founder Matt Huang has taken more of the leadership role, Ehrsam added. With the new role, Ehrsam will continue to work on crypto policy, and work with Paradigm’s investing and research teams.&nbsp;



“After starting Coinbase with Brian [Armstrong], I somehow managed to win the co-founder lottery yet again. [Huang] is an excellent leader and investor, and has built an incredible investing and research team at Paradigm,” Ehrsam said.



The Information, which initially reported the news before Ehrsam’s announcement, claims that Paradigm is looking to raise a new fund.&nbsp;



In late September, <a href="https://blockworks.co/news/paradigm-policy-lab-launch">Paradigm announced that it was creating a new policy lab</a> to focus on solutions to US regulatory issues through a tech focus.&nbsp;



Huang and Ehrsam started the crypto venture capital firm in 2018.&nbsp;



The company is bouncing back after it invested roughly $278 million in the now-bankrupt crypto exchange <a href="https://blockworks.co/tag/ftx">FTX</a>. Huang, who took the stand in former FTX CEO Sam Bankman-Fried’s trial earlier this month, said that the investment was now with $0. 



As part of his testimony, <a href="https://blockworks.co/news/sam-bankman-fried-recap-trial-week-one">Huang said he was concerned about “special privileges”</a> potentially being granted to Alameda at the time, though he was assured that wasn’t the case. However, testimonies from <a href="https://blockworks.co/news/sam-bankman-fried-gary-wang#:~:text=Wang%20pleaded%20guilty%20last%20December,prosecutors%2C%20as%20Blockworks%20previously%20reported.&amp;text=Wang%20explained%20that%20these%20privileges,went%20negative%20or%20below%20zero.">other FTX insiders allege that Alameda did receive special treatment</a>.



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Paradigm’s Fred Ehrsam moves to general partner role

Sebastian Sinclair

Coinbase co-founder Fred Ehrsam appears bullish on the US crypto exchange’s stock.



Ehrsam, also the co-founder and managing partner of crypto investment firm Paradigm, scooped up $48.8 million worth of Coinbase (COIN) shares for his funds earlier this week, according to an SEC filing.



The co-founder, via Paradigm, has acquired an additional 810,000 shares of Coinbase stock in several trades across Tuesday and Wednesday. He bought shares for between $59.30 and $63.20 each.



Ehrsam now owns a total of 5.6 million COIN shares held indirectly through three entities Paradigm One LP, The Frederick Ernest Ehrsam III Living Trust and Paradigm Fund LP, the filing shows.



Coinbase, one of the largest cryptocurrency exchanges, went public through a direct listing on the Nasdaq Exchange in Apr. 2021. Ehrsam raked in $270 million by offloading Coinbase stock in the months after Coinbase went public — cashing in nearly 856,000 shares for $315.67 on average.



Since its listing, COIN has plummeted some 85% from its opening bid more than two years ago, when it listed at $381 a share. It&#8217;s now at $60.35. In year-to-date terms, COIN is faring much better, up 81%.



It follows earlier purchases from Coinbase insider and Shopify CEO Tobias Lutke, who&#8217;d been spending hundreds of thousand of dollars on COIN stock per week on average throughout the start of the year. 



Those buys have since ceased, per OpenInsider data compiled by Blockworks, which tracks SEC filings.



Ehrsam co-founded the company with CEO Brian Armstrong in 2012. Prior to founding Coinbase, Ehrsam was a foreign exchange trader at Goldman Sachs.&nbsp;



Armstrong himself has been busy selling Coinbase stock fund his other ventures, with an eye to offload 2% of his company stake <a href="https://blockworks.co/news/coinbase-ceo-armstrong-stock-sales-life-extension">over one year</a>.



Ehrsam left his day-to-day role at Coinbase in 2017 but continues to be involved with the company, serving as a company director. After leaving Coinbase, he co-founded Paradigm, a crypto-focused investment firm, with Matt Huang, a former partner at Sequoia Capital.



Ehrsam’s latest Paradigm buys come around one year after his funds and trusts first bought the Coinbase dip, spending $76.8 million to acquire a little more than 1.1 million COIN shares, scooping them up for $68.49 on average.



Overall, since Coinbase went public, the cost average of Ehrsam-related vehicles currently sits at $65.67, putting them about 9% down on COIN purchases to date.



Updated May. 13, 2023 at 6:05 am ET: Amended headline and added context to emphasize Ehrsam&#8217;s relationship with Paradigm



David Canellis contributed reporting.



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Coinbase Co-founder’s Fund Buys Dip, Spends $50M on COIN

Coinbase CEO Brian Armstrong is well on his way to fulfilling a pledge to sell company stock to fund his new ventures.



Last October, Armstrong promised to sell 2% of his total Coinbase stake over the next year, with proceeds going to projects like life extension unit NewLimit and science startup Research Hub, both of which he co-founded.



Armstrong is now about one-third of the way through offloading that stock. He held 39.6 million Coinbase shares at the time of the firm’s 2022 <a href="https://s27.q4cdn.com/397450999/files/doc_downloads/2022/04/COIN-Annual-Report.pdf" target="_blank" rel="noreferrer noopener">proxy</a> statement, representing an 18% stake in the company (with 59.5% voting power).



<ul class="wp-block-list">
<li>2% of Armstrong’s stake was around 792,000 shares.</li>



<li>Armstrong has sold 252,722 Coinbase shares for $13.8 million.</li>



<li>He has 539,275 shares to go, now worth $31.74 million</li>
</ul>



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/12754211/embed#?secret=5yJ9wOK8oS" data-secret="5yJ9wOK8oS" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Brian Armstrong&#8217;s largest sale was $4.55 million on Jan. 13, as shown by the big yellow bubble.</figcaption></figure>



Coinbase stock has fallen 8% since Armstrong tweeted his plans, and nearly 85% since its direct listing in Apr. 2021. He&#8217;s fetched an average price of $54.80 (Coinbase shares are currently worth $59).



Direct listings differ from traditional initial public offerings, in that new shares aren’t created.



Instead, insiders and other early investors provide all the liquidity for public trade. Coinbase insiders have sold more than $5.8 billion in company stock since the firm’s direct listing, $5 billion of which occurred on the first day of trade.



Armstrong took part in those first-day sales, offloading 749,999 shares for $291.8 million, garnering an average price of $389.10. Coinbase stock is down 85% since then, and Armstrong hadn&#8217;t sold any Coinbase stock until just after his pledge.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I’m sharing this as I want you to hear it from me first.&mdash; Brian Armstrong (@brian_armstrong) <a href="https://twitter.com/brian_armstrong/status/1581099571786043393?ref_src=twsrc%5Etfw">October 15, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Only two Coinbase insiders have bought stock since it went public: Shopify CEO and Coinbase board member Tobias Lütke has acquired $10 million COIN, making <a href="https://blockworks.co/news/crypto-execs-bought-dip" target="_blank" rel="noreferrer noopener">regular weekly purchases</a> of more than $350,000 since Aug. 2022. He’s up 7% on those trades ($745,600 in paper gains).



Coinbase co-founder Fred Ehrsam bought the dip much earlier, spending $76.8 million on 1.12 million shares last May for an average price of $68.49. So, he’s 14% down on those buys ($10.6 million in paper losses).



Although, Ehrsam cashed in more than $492 million in Coinbase stock between its direct listing and Dec. 2021 for an average price of $328.



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Coinbase CEO Busy Selling Stock to Fund His Other Startups

<div id="highlights-block_628be37ae5488" class="highlights">
 <ul>
 <li>Coinbase co-founder Fred Ehrsam has acquired $75 million in company stock over the past two weeks</li>
 <li>Some crypto executives bought in February, causing them unrealized losses</li>
 </ul>
 
</div>



A raft of crypto executives bought the dip of their own companies’ stock this month — hinting that industry insiders are hoping for a sharp rebound.



Coinbase (COIN) and Paradigm co-founder Fred Ehrsam led the charge, buying up $75 million worth of company shares over the past two weeks, split between trades on May 13 and May 17.



Ehrsam acquired almost 1.1 million Coinbase shares for an average price of $68.70 — marking the first time he’s bought Coinbase stock since the exchange went public in April 2021. 



In that time, Ehrsam has sold 1.5 million shares at an average price of $328 to rake in $492 million, according to SEC filings compiled by finance portal <a href="http://openinsider.com" target="_blank" rel="noreferrer noopener">OpenInsider</a>. This includes $2.1 million in exercised options.



Ehrsam is not yet in the green on his recent buys. In fact, he’s down $2 million. Coinbase stock currently trades for around $67 — 82% below its initial list price of $381.



Cathie Wood’s Ark Invest fund appears to have fared better, having acquired 546,579 Coinbase shares across four funds just after COIN crashed 25% on May 11. Ark’s new Coinbase holdings were worth $29 million at the time. They’re now worth $36.6 million thanks to a 25% recovery.



Meanwhile, MicroStrategy (MSTR) executives bought fewer company shares. Timothy Lang, who’s served as the firm’s senior executive vice president and chief technology officer since 2014, spent $500,000 on 2,500 shares at $200.



Lang cashed in $53.2 million worth of MicroStrategy stock between October 2020 and November 2021 — 115,000 shares at an average price of $463. MicroStrategy stock now changes hands at just under $209 — more than 75% below its most recent peak of $891, recorded in November.



MicroStrategy director Leslie Rechan secured 2,000 shares at $204.42, a haul worth about $408,000 at the time. Rechan and Lang both made their trades on May 11.



Between November 2020 and November 2021, Rechan exercised options and sold 20,650 shares at an average price of $531, receiving $11 million. MSTR surged 300% in that time — from around $200 to $800 — gains inspired by ravenous BTC purchases actioned by bullish CEO Michael Saylor. Both Rechan and Lang are about even on their recent buys as of 3:30 pm ET.



Kevin Denuccio, director at bitcoin mining giant Marathon Digital Holdings (MARA), bought 15,424 MARA shares at $9.63 earlier this month, worth $148,500 at the time. Those shares are now worth almost $154,000 as MARA trades for $10 — a 4% gain.



<h3 class="wp-block-heading">Some crypto executives “bought the dip” too early</h3>



Some crypto executives bought in February when BTC hovered around $40,000, resulting in unrealized losses.&nbsp;



Director Michael Lempres of California-based crypto bank Silvergate Capital (SI) snatched up $56,000 in company stock in February, paying $112.20 per share. Lempres’ new holdings are now worth roughly $37,300, as SI stock has fallen 33% to below $75.



Silvergate Capital made headlines in late January when the firm acquired assets tied to failed Meta stablecoin project Diem.



Insiders at crypto mining outfit CleanSpark (CLSK) also bought in February. Chief Financial Officer Gary Vecchiarelli acquired more than $213,000 in company stock together with director Thomas Wood; 22,757 shares at an average price of $9.36.&nbsp;



CLSK now trades for $5.52, representing paper losses for Vecchiarelli and Wood of almost 40%.



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Crypto Execs at Coinbase, MicroStrategy and Marathon Buy the Dip

Ben Strack

<div id="highlights-block_61ddb04071b0c" class="highlights">
 <ul>
 <li>Venture capital firm Sequoia led the round through investments from its Heritage, Global Equities and Global Growth funds</li>
 <li>Crypto-focused investment firm Paradigm will help Citadel expand to more markets and asset classes, including crypto, according to Paradigm co-founder Matt Huang</li>
 </ul>
 
</div>



Venture capital firm <a href="https://www.sequoiacap.com" target="_blank" rel="noreferrer noopener">Sequoia Capital</a> and crypto-focused investment firm <a href="https://www.paradigm.xyz" target="_blank" rel="noreferrer noopener">Paradigm</a> have invested $1.15 billion in market maker <a href="https://www.citadelsecurities.com" target="_blank" rel="noreferrer noopener">Citadel Securities</a> as it looks to ​​further scale its business and expand into new markets.



Based in Chicago, Citadel offers equity and fixed income products to 1,600 clients globally, including central banks, financial institutions, government agencies, corporations, insurers and sovereign wealth funds.



&#8220;As technological innovation in financial markets becomes only more important, we see enormous opportunities to meet the needs of our clients across more markets and more products,” Citadel Securities CEO Peng Zhao said in a statement.



Citadel Securities Chairman Ken Griffin told the Economic Club of Chicago in October that his company does not trade cryptocurrencies because of regulatory uncertainties around them, <a href="https://www.reuters.com/business/citadel-securities-avoids-crypto-due-regulatory-uncertainty-founder-2021-10-04/" target="_blank" rel="noreferrer noopener">Reuters reported</a>.



A Citadel spokesperson did not immediately return Blockworks’ request for comment about how the company could look to get involved in crypto.&nbsp;



Sequoia led the funding round through investments from Sequoia Heritage, Sequoia Capital Global Equities and its Global Growth Fund.



&#8220;Citadel Securities has carved out a unique place in the financial markets through its ability to absorb and price risk using techniques and capabilities from far outside the traditional world of Wall Street,&#8221; Sequoia Partner Alfred Lin said in a statement.&nbsp;



A Sequoia representative did not immediately return Blockworks’ request for comment.&nbsp;



Sequoia has <a href="https://cms.blockworks.co/sequoia-capital-may-be-embracing-crypto/" target="_blank" rel="noreferrer noopener">recently signaled its interest</a> in the crypto space. It changed its Twitter bio last month to say: “Mainnet faucet. We help the daring buidl legendary DAOs from idea to token airdrops. LFG.”  It also recently <a href="https://opensea.io/assets/0x97e5762a9670bb5aa5b47e132a045d6df1c309fe/0" target="_blank" rel="noreferrer noopener">auctioned off</a> its 2005 YouTube memo as a non-fungible token (NFT) on OpenSea for $884,776 worth of ether.



Meanwhile, Paradigm is an investment firm focused on investing in crypto and Web3 companies and protocols. It often invests at early stages and offers additional capital to its portfolio companies over time, according to the firm.



Paradigm <a href="https://cms.blockworks.co/paradigm-launches-2-5-billion-crypto-fund/" target="_blank" rel="noreferrer noopener">announced the launch</a> of a $2.5 billion venture fund in November. The new fund was to operate alongside Paradigm’s existing flagship fund and will “continue investing in the next generation of crypto companies and protocols,” Paradigm co-founders Matt Huang and Fred Ehrsam said at the time.



&#8220;We look forward to partnering with the Citadel Securities team as they extend their technology and expertise to even more markets and asset classes, including crypto,&#8221; Huang said in a statement.&nbsp;



A Paradigm spokesperson declined to comment on the investment in Citadel.



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