After facing backlash from clients for using private data to facilitate equity transactions, Carta has announced its departure from the secondary share trading business. This decision was a quick response to the controversy that emerged and raised questions about data security and the true purpose of Carta’s product.
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One customer’s criticism shed light on Carta’s role in connecting buyers and sellers of startup shares on its secondary trading platform without obtaining proper permissions. This sparked concerns about the security of data and the company’s intentions behind its actions. Cloudflare’s CEO and co-founder, Matthew Prince, even weighed in, suggesting that Carta may have exaggerated its value to investors by positioning itself as “the world’s biggest secondary market” based on the data it has access to through its customers.