Black Swan author and famous economist Nassim Nicholas Taleb advised investors to withdraw their money as the US’s largest Bitcoin exchange sells $1.6 million worth of shares. A similar situation happened to FTX earlier in the month.
Famous economist revealed the Bitcoin exchange that will be the next FTX
Nicholas Taleb criticized CEO Brian Armstrong for selling more than $1.6 million worth of Coinbase shares. Amid these allegations, the exchange advised its clients and investors to leave immediately. Recently, reports have surfaced showing that Armstrong sold $1,625,102 worth of Coinbase shares on November 11. The data emerges from a Coinbase filing submitted to the US regulator SEC. Taleb says the reports reveal the danger surrounding Coinbase as it is a publicly traded company. In his tweets during the day, he stated:
Take as much as you can from the sinking ship. In the real world, pre-crypto, a CEO would never sell his own shares shouting “everything is fine”. A CEO who sells shares expresses such a loss of trust in the company that it is taken very seriously.
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
Taleb also says that the sale of a company’s stock by its CEO shows the CEO’s lack of trust in the company. He especially emphasizes that investors should take this very seriously. This is because the company is trying to hide some problems. Taleb also mentioned that this is a red flag. Their concerns arise in the midst of a crisis in the crypto market triggered by the FTX crash.
Vitalik Buterin: I strongly disagree
The Ethereum co-founder refuted what Taleb had said to Coinbase as the reason behind Armstrong’s sale. Buterin highlighted the “psychological stress” that comes with holding nearly all of one’s net worth in one illiquid asset. The Russian-born Canadian programmer also stated that it is prudent to diversify one’s portfolio. He said there’s no harm in doing this. Buterin adds that the mental peace that results from this kind of diversification can contribute to productivity in the workplace:
There’s absolutely nothing wrong with a little diversification, and the sanity boost from diversification can even improve business performance.
Strongly disagree. The psychological stress of having 99% of your net worth in one single illiquid asset can easily make people go insane. There is absolutely nothing wrong with some diversification, and the sanity boost from diversifying can even improve work performance.
— vitalik.eth (@VitalikButerin) November 17, 2022
Coinbase was the first cryptocurrency exchange to go public on the Nasdaq. During this period, reports emerged that Armstrong sold approximately $291 million in shares on its first day. A filing with the SEC shows that Armstrong sold 749,999 shares in three lots. However, Armstrong announced last month that he plans to sell about 2% of Coinbase shares. He said he would direct the proceeds towards funding scientific research.
As you follow on Kriptokoin.com, Shopify CEO Lutke Tobias, who joined Coinbase’s board of directors in January, has been on a Coinbase buying spree ever since. Coinbase (COIN) is currently trading at 48.33, down 1.02% against the dollar in the last 24 hours. It decreased by 86.52% compared to last year due to global developments.
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