Texas Court Dismisses Coinbase Derivative Suit Over Missing Demand

A shareholder who sued Coinbase's directors without first asking the board to act has lost on that ground alone. The Business Court of Texas dismissed Guillaume v. Armstrong without prejudice on 2 October, holding that Texas law decides who may bring a derivative suit for a Texas corporation even where the conduct complained of happened under Delaware incorporation. Judge Andrea K. Bouressa sustained the defendants' special exceptions and did not reach the merits. Gary Guillaume, the plaintiff, had pleaded that a demand on the board would have been futile, an option Delaware law gives and the Texas statute does not. The ruling is dated Friday 2 October and crypto coverage of it began eight days later.

Two states, one set of claims

Guillaume filed in April, in Dallas County, over conduct he dated from 14 April 2021 to 5 June 2023. Coinbase was a Delaware corporation throughout that stretch. Its conversion to Texas took effect on 15 December 2025, approved by written consent on 4 November 2025 from holders of about 78.40% of the voting power, measured against a 31 October 2025 record date. Bouressa assumed without deciding that Delaware law governs the claims themselves. She then split off a second question: which state's law fixes a shareholder's authority to sue at the moment the suit is brought. On that one the opinion applies the internal affairs doctrine, the rule that a company's home state governs its own corporate machinery, and lands on Texas.

What section 21.553 requires

Section 21.553 of the Texas Business Organizations Code requires a shareholder to file a written demand with the corporation, then wait. No proceeding may be instituted until the 91st day after the demand is filed. A rejection, or a showing of irreparable injury, can end the wait early under section 21.553(b). Nothing ends the demand itself.

"Failure to make a demand is never excused," the opinion said.

Guillaume argued that Coinbase's own conversion disclosures had preserved the Delaware route. The court read the 14C information statement the other way, noting that it did not address governing law and that its exhibits said Texas law would govern the company's affairs after the move. It also said the requirement cannot be waived by contract. One question is left open at paragraph 14, whether pre-suit demand is part of standing under Texas law or something separate from it. The opinion does not answer it.

The futility test he did not get to run

Under the Delaware framework described in the opinion, a plaintiff may make a demand or plead that demand would be futile. Futility needs particularised allegations about individual directors, and at least half the relevant board must fail the test. Coinbase's board had named a committee of two it called independent and disinterested, Christa Davies and Paul Clement. Voting power sits elsewhere. On the 31 March figures in the company's 24 April proxy, Armstrong held 49.6% of it, with Armstrong-associated entities and trusts at 18.9% and Fred Ehrsam at 10.6%. Class B shares carry 20 votes each, Class A one. Whether that concentration would have satisfied the Delaware test was never put to the question, because the Texas rule ended the case first.

Still open after the dismissal

Dismissal without prejudice leaves the claims alive. Guillaume can serve a demand and come back from the 91st day. The court said nothing about whether the conduct he alleges occurred. Where New York's Celsius case ended in a lifetime ban and a conditional $35 million the same week, this one settled a point of procedure and left the substance untouched. None of it reaches the trading business, which took a record 10.3% of global crypto trading volume in the second quarter. Two accounts date the filing differently, 16 April on CryptoSlate's reading and April in Dallas County on a practitioner note of 5 October. Neither contradicts the other. On CryptoSlate's account Armstrong posted about the ruling on 9 October; no other account read here mentions the post. The wider effect falls on other former Delaware companies now chartered in Texas. How far it reaches is for the next plaintiff to find out.