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

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. 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.

On October 9, Coinbase CEO Brian Armstrong praised the precedent as encouraging more companies to incorporate in Texas and thanked Greg Abbott. That endorsement came a week after Judge Andrea K. Bouressa signed the order. The immediate lesson for public shareholders is that the law governing a company’s past conduct and the law governing their ability to challenge it can diverge after reincorporation.

A derivative action lets a shareholder pursue a claim on the corporation’s behalf. The claim belongs to the company, and the shareholder seeks to exercise authority ordinarily held by its board. That distinction explains why the first dispute here concerned permission to bring the action rather than the directors’ alleged wrongdoing.

The parties agreed that Guillaume filed his suit on April 16, 2026, alleging misconduct between April 14, 2021, and June 5, 2023. Coinbase was incorporated in Delaware during that earlier period. Its Texas conversion became effective on December 15, 2025, several months before the suit was filed.

Under the Delaware framework described in the opinion, a derivative plaintiff can make a demand or plead that doing so would be futile. Futility requires particularized allegations about individual directors, examining whether they received a material personal benefit, face a substantial likelihood of liability, or lack independence from someone who benefited or faces such liability. At least half the relevant board must satisfy the test.

Guillaume tried that route. He did not make a pre-suit demand.

For this action involving a public company, Texas required a particularized written demand identifying the disputed conduct and requesting suitable corporate action. The October 2 opinion described an ordinary 90-day wait after demand, with derivative proceedings permitted from the 91st day. Corporate rejection of the demand or irreparable injury to the corporation can shorten the waiting period. Both exceptions leave the written-demand requirement in place.

Guillaume’s futility allegations could not substitute for the written request Texas required. The missing demand was enough to end this action before the court reached its merits.

Guillaume argued that Delaware law should apply because the claims arose before Coinbase’s Texas move. Bouressa accepted that premise about the underlying claims for purposes of the analysis, without resolving it.

She then considered a separate question: which state’s law governed the shareholder’s authority to file those claims for Coinbase?

The court’s answer turned on the company’s incorporation when the shareholder exercised that authority. A corporate claim can arise under one state’s law, while a later effort to pursue it derivatively is governed by another state’s rules. The opinion reasoned that a shareholder does not acquire a vested right, when a corporate claim arises, to bring it personally on the corporation’s behalf at some later date.

That reasoning gives reincorporation consequences beyond future board decisions. In this case, the December 2025 conversion affected the route for challenging alleged conduct dating back to 2021.