Carta’s decision to exit the secondary share trading business was a quick response to the controversy that emerged after it was chastised by customers for using private data to foster its equity transactions.
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After a customer criticized Carta for working to connect buyers and sellers of startup shares on its secondary trading platform without permissions, there have been several questions regarding data security and just what — or who — its product is. Cloudflare’s CEO and co-founder, Matthew Prince, argued in the aftermath, for example, that the only way for Carta to “justify [its] multiple [and] valuation” was to pitch investors that it was going to build “the world’s biggest secondary market” predicated on the data it holds on behalf of its customers.