Cathie Wood’s investment firm, Ark Investment Management LLC, has made a daring move by increasing its holdings of the beleaguered crypto firm Coinbase Global (NASDAQ: COIN).
This decision comes at a time when Coinbase shares faced a significant decline following allegations from the Securities and Exchange Commission (SEC) regarding unlawful exchange operations.
According to data compiled by Bloomberg, three of Ark’s funds, including Wood’s renowned flagship Ark Innovation ETF, purchased a staggering 419,324 shares of Coinbase on Tuesday, as the company’s stock plummeted by up to 21%.
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The move roughly translates to a $21 million tag price for the buy.
This move by Ark demonstrates their unwavering confidence in Coinbase, despite the inherent volatility in the cryptocurrency market and the numerous challenges faced by the industry, such as the downfall of FTX founder Sam Bankman-Fried’s empire, regulatory crackdowns in the US, and a series of industry-related bankruptcies.
The SEC’s accusations against Coinbase revolve around the company allegedly evading regulatory rules over an extended period. The exchange operator has been accused of allowing users to trade various crypto tokens that are considered unregistered securities. In response, Coinbase has taken a defiant stance, expressing its willingness to fight the legal battle all the way to the Supreme Court.
Furthermore, the regulatory crackdown on Coinbase seems to be expanding, as state regulators from California to New Jersey are now demanding that the company halt its “staking service.” This service offers customers a return on their tokens by utilizing them to facilitate blockchain transactions.
Interestingly, Ark had previously sold some of its Coinbase holdings in July, citing regulatory uncertainties after the SEC labeled certain tokens listed on the platform as securities. However, even with Tuesday’s significant slide, Coinbase shares have managed to rebound, currently standing at an impressive 60% increase from their record low in December.
Cathie Wood’s flagship fund has risen by 37% this year, surpassing gains seen in the Nasdaq 100 Index (33%) and the S&P 500 (12%). It is worth noting that Ark Innovation ETF experienced a considerable slump of 67% last year.
As of March 31, Wood’s firm held an impressive 11.7 million Coinbase shares, accounting for 6.3% of the shares outstanding. Earlier this year, she made headlines by reiterating her ambitious price target of $1 million for Bitcoin, the largest cryptocurrency, which currently hovers around $27,000.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
