Coinbase’s Texas move gets a shareholder suit dismissed over Delaware-era claims

What happened

Its consequential finding concerned who could pursue claims belonging to Coinbase: Texas’s demand requirement applied to the shareholder’s authority to sue, even though the court assumed without deciding that Delaware law governed the underlying claims. The October 2 court order required a written board demand in this action, without deciding whether directors committed misconduct. Coinbase is a Bitcoin and cryptocurrency company based in San Francisco.

Coinbase’s move to Texas changed the rule a shareholder had to satisfy before suing its directors over alleged conduct from the company’s Delaware years. In an October 2 ruling , the Texas Business Court dismissed Gary Guillaume’s derivative action because he had not first demanded that Coinbase take action on the claims.

The dismissal was without prejudice, and the court did not decide whether the alleged misconduct occurred. On October 9, Coinbase CEO Brian Armstrong praised the precedent as encouraging more companies to incorporate in Texas and thanked Greg Abbott.