Cathie Wood’s funds boosted their holdings of Coinbase Global as shares slumped after the US Securities and Exchange Commission accused the company of operating an unlawful exchange.
Three Ark Investment Management funds, including Wood’s flagship Ark Innovation ETF, bought 419,324 shares of the cryptocurrency exchange operator Tuesday (Wednesday AEST) as it tumbled as much as 21 percent. The SEC made similar charges against Binance Holdings at the start of the week.
Ark is the fourth-largest holder of Coinbase and has been adding to its stake on dips for nearly a year despite crypto market volatility caused by the collapse of Sam Bankman-Fried’s empire, a widening US regulatory crackdown, and a spate of bankruptcies in the industry.
The SEC on Tuesday alleged that Coinbase evaded the regulator’s rules for years by letting users trade numerous crypto tokens that were actually unregistered securities. The exchange operator responded by saying it was willing to take the legal fight all the way to the Supreme Court.
The crackdown on Coinbase has expanded, with state regulators from California to New Jersey demanding the company halt its so-called staking service, which offers customers a return for letting their tokens be used to facilitate blockchain transactions.
Ark sold some of Coinbase's holdings in July, citing regulatory uncertainty after the SEC deemed some tokens listed on the US exchange’s platform as securities. Even after Tuesday’s slide, Coinbase shares are up almost 60 percent from their record low hit in December.
Ms Wood’s flagship fund has risen 37 percent this year, compared with a gain of 33 percent for the Nasdaq 100 and a 12 percent advance for the S&P 500. Ark Innovation ETF slumped 67 percent last year.
Ms Wood’s firm held more than 11.7 million Coinbase shares, or 6.3 percent of shares outstanding, as of March 31. Earlier this year, she reiterated her price target of $US1 million for Bitcoin, the largest cryptocurrency, which currently trades at around $US27,000.
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