Crypto exchange Coinbase is making a big move: it’s leaving Delaware, where many U.S. companies are legally registered, and setting up its official home in Texas. Paul Grewal, Coinbase’s chief legal officer, announced this decision, explaining that the company is following a path recently taken by Tesla under Elon Musk. Musk also moved his electric car company, Tesla, and rocket maker, SpaceX, from Delaware to Texas last year.
Grewal shared in a Wall Street Journal article that Delaware’s legal system, once known for being reliable, has become less predictable. He pointed to recent “unpredictable outcomes” in the Delaware Chancery Court as a key reason for the switch.
Coinbase isn’t alone in ditching Delaware. Other well-known companies, such as Dropbox, TripAdvisor, and the venture capital firm Andreessen Horowitz, have also announced plans to leave. Elon Musk strongly pushed for companies to move out of Delaware, especially after a court there canceled his massive 2018 pay deal from Tesla, which was worth around $56 billion. Back in February 2024, Musk even posted on X, telling other companies to consider leaving Delaware “as soon as possible.” Interestingly, just last week, Tesla shareholders approved a new, potentially much larger pay package for Musk.
For a long time, Delaware was the go-to state for companies to incorporate. It had a business-friendly corporate law and experienced judges, known for balancing the interests of company executives and shareholders. However, Texas offers a different advantage: a state law that allows companies to limit shareholder lawsuits against executives for certain duties.
Currently, Coinbase and Andreessen Horowitz, an early investor in Coinbase, are dealing with a lawsuit in Delaware. This case is about the sale of Coinbase shares when the company went public in 2021. It’s also worth noting that Coinbase CEO Brian Armstrong, much like Elon Musk, was a significant donor to Donald Trump’s 2024 presidential campaign.
