Coinbase Texas Move Ends Shareholder Suit Over Delaware Claims

The Texas Business Court dismissed Gary Guillaume’s derivative lawsuit against Coinbase without prejudice after he failed to make a written demand before suing. Judge Andrea K. Bouressa signed the order Oct. 2.

The court did not rule on whether Coinbase’s directors engaged in misconduct. The case involved alleged conduct from April 14, 2021, through June 5, 2023, when Coinbase was incorporated in Delaware. The company became a Texas corporation on Dec. 15, 2025, several months before Guillaume filed the suit on April 16, 2026.

A derivative lawsuit allows a shareholder to pursue claims belonging to a corporation. Shareholders generally must first ask the board to take action. Under Delaware law, a shareholder can avoid that demand by making specific allegations that the directors lack independence, face a substantial risk of liability or received a personal benefit.

Guillaume relied on that exception and did not make a pre-suit demand. Texas law requires shareholders of public companies to submit a particularized written demand describing the alleged conduct and requesting corporate action. The shareholder generally must then wait 90 days before filing. The waiting period can be shortened if the company rejects the demand or waiting would cause irreparable harm to the corporation, but the written demand remains required.

Bouressa ruled that Guillaume’s allegations of demand futility could not replace the written request required by Texas law. That finding ended the case before the court considered the alleged misconduct.

Guillaume argued that Delaware law should govern because the claims involved conduct that occurred before Coinbase’s reincorporation. The court assumed, without deciding, that Delaware law applied to the underlying claims. It treated that issue separately from the law governing Guillaume’s authority to bring a derivative action for Coinbase.

The court determined that Texas law governed that authority because Coinbase was incorporated in Texas when Guillaume sought to exercise it. A corporate claim can arise under one state’s law while a later shareholder action pursuing the claim is subject to another state’s requirements. The court found that shareholders do not gain a permanent right to bring a claim derivatively under the law in effect when the alleged conduct occurred.

Guillaume also relied on Coinbase’s reincorporation disclosures, which preserved eligible shareholders’ standing and ability to bring derivative claims involving earlier conduct, subject to continued share ownership. The court found that the disclosures did not promise that Delaware law would continue to govern shareholder authority after the conversion. The documents stated that Texas law would govern Coinbase’s corporate affairs after the change.

The court also found no evidence that the demand requirement made it impossible or materially more difficult for Guillaume to sue. He did not show that making a demand would cause irreparable harm, prejudice his claims or give Coinbase an unfair advantage. The court found no evidence that Coinbase had contracted around Texas’s demand rule.

Coinbase CEO Brian Armstrong praised the ruling Oct. 9 and thanked Texas Gov. Greg Abbott. He described the decision as a precedent that could encourage more companies to incorporate in Texas.

Coinbase’s November 2025 information statement disclosed that a group associated with Armstrong and co-founder Fred Ehrsam held about 78.4% of the voting power as of Oct. 31, 2025. The group approved the conversion by written consent on Nov. 4.

Coinbase disclosed that a committee comprising Christa Davies and Paul Clement reviewed Delaware, Nevada and Texas before recommending Texas. The board unanimously approved the conversion, citing litigation predictability, possible savings on defense costs, indemnification and insurance, and Texas’s cryptocurrency industry.

Coinbase’s Class B shares carry 20 votes each, compared with one vote for each Class A share. In an April 2026 proxy filing, the company reported voting interests of 49.6% for Armstrong, 18.9% for entities and trusts associated with him, and 10.6% for Ehrsam, based on securities-law ownership rules.