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Cathie Wood’s ARK Invest Buys Coinbase Stock After ‘Buy High Sell Low’ Strategy Backfires

2 mins
Updated by Kyle Baird
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In Brief

  • Cathie Wood's Ark Invest buys Coinbase shares after SEC lawsuit-induced dip.
  • Coinbase faces legal issues, including a recent SEC lawsuit that accuses it of several violations.
  • Recently, Ark Invest sold a significant portion of its Nvidia stake, missing out on massive gains.
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Cathie Wood’s ARK Invest is back to buying Coinbase Global shares again following a price dip brought on by an SEC motion to sue the crypto exchange. 

The securities regulator sued Coinbase the day after it went after Binance. Due to the legal action, Coinbase’s price dropped by almost 20%, giving Wood’s money a chance to buy cheap and grow later. Three Ark Investment Management LLC funds purchased 419,324 shares of exchange Coinbase for more than $20 million.

Ark Invest Buys Coinbase Amid SEC Lawsuit

Bloomberg reports that Ark Invest purchased Coinbase through the Ark Innovation ETF and two additional Cathie Wood-led fund vehicles.

Following significant stock purchases in March and January that increased its stake to about 9.9 million shares of Coinbase, according to public records, Ark Invest also purchased 168,869 shares of COIN stock earlier in May.

If you want a detailed insight into Coinbase and its public offering, check out the full scoop here!

Notably, despite numerous rounds of lay-offs throughout the bear market, the funds demonstrated trust in the exchange. Around that time, Wood stated that despite losing FTX as a rival, Coinbase would still succeed. She mentioned the CEO’s desire for regulatory clarification as a positive factor.

The US SEC filed a lawsuit against Coinbase on Tuesday, alleging that the cryptocurrency exchange acted as an unregistered broker after designating some cryptocurrencies as securities. The SEC’s crackdown on Binance and Coinbase first hurt the market until a modest reversal.

Troubles Mount for Coinbase

Concerning a Wells Notice it received over the sale of unregistered securities, Coinbase has been engaged in a conflict with the Securities and Exchange Commission (SEC).

State officials are also pursuing the Nasdaq-listed exchange for its staking products. COIN has dropped about 17% over the previous five days and is currently trading slightly above $53 in pre-market at the time of writing.

Despite the difficult market conditions, Ark Invest has held a buy recommendation for COIN on its funds. But last year, this wasn’t the case. Cathie Wood’s funds sold a bulk of its Coinbase shares in July 2022 after the SEC first announced a probe into the exchange. This cost the fund over $350 million in losses.

But the exchange’s legal issues are far from over. Coinbase CEO Brian Armstrong and other top executives have previously been accused of utilizing insider information to avoid losses.

That said, Wood’s Ark Invest heavily invested in COIN soon after missing the Nvidia rally. According to reports, the investment business owned 1.3 million shares at the beginning of October. However, it cut that figure to just 390,000 after citing overvaluation. On the other hand, Nvidia, the current leader in AI technology, enjoyed a record rise to one trillion dollars.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

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Shraddha Sharma
Shraddha is an India-based journalist who worked in business and financial news before diving into the crypto space. As an investment enthusiast, she has also has a keen interest...
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