Brian Armstrong, chief executive officer of Coinbase Global Inc., speaks during the Messari Mainnet summit in New York, on Thursday, Sept. 21, 2023.
Michael Nagle | Bloomberg | Getty Images
Coinbase is following Tesla out of Delaware and into Texas.
Paul Grewal, Coinbase’s chief legal officer, wrote in a Wall Street Journal op-ed on Wednesday that the crypto exchange is moving its state of incorporation, a year after Elon Musk did the same with his electric vehicle maker. Musk also reincorporated his rocket maker SpaceX from Delaware to Texas.
“Delaware’s legal framework once provided companies with consistency. But no more,” Grawal wrote, pointing to recent “unpredictable outcomes” in the Delaware Chancery Court.
A handful of notable names, including Dropbox, TripAdvisor and venture firm Andreessen Horowitz have announced departures from Delaware. It’s a move that was championed by Musk following a Delaware Chancery Court ruling that ordered Tesla to rescind the CEO’s 2018 pay package, worth about $56 billion in options.
“If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible,” Musk wrote in a post on X in February 2024, when he filed to change SpaceX’s incorporation state.
Last week, Tesla shareholders voted to approve Musk’s more recent pay package, which could be worth up to $1 trillion.
Delaware has long been the dominant state for U.S. companies to incorporate due to its flexible corporate code and expert judiciary, and is seen as balancing the rights of executives and shareholders. A Texas state law allows corporations to limit shareholder lawsuits against insiders for breach of fiduciary duty.
Coinbase and Andreessen Horowitz, an early backer, currently face a lawsuit in Delaware concerning the sale of shares in the crypto company tied to its public listing in 2021.
Like Musk, Coinbase CEO Brian Armstrong was a major contributor to President Donald Trump’s 2024 campaign for the White House.
— CNBC’s Lora Kolodny contributed to this report.
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