ARK Invest, Cathie Wood’s investment firm, acquired additional shares of the cryptocurrency exchange Coinbase, valued at over $21 million, despite ongoing accusations by the U.S. Securities and Exchange Commission (SEC).
ARK Invest’s decision comes one day after the SEC sued Coinbase, accusing it of operating as a national securities exchange and an unregistered broker.
ARK Invest buys $21M of Coinbase shares amidst SEC accusations
Cathie Wood and her investment firm demonstrated their confidence in Coinbase through a multimillion-dollar purchase, expecting long-term profits. Despite the SEC lawsuit, Coinbase remains the largest cryptocurrency exchange in the United States.
While many investors panicked over the SEC lawsuit, several ARK Invest ETFs took advantage of the stock price drop to make substantial purchases. The Ark Innovation ETF acquired 329,773 shares, the Next Generation Internet ETF acquired 53,885 shares, and the Ark Fintech Innovation ETF acquired 35,666 shares.
With the recent purchase of over 419,000 Coinbase shares, Ark Invest now holds a total of more than 11.4 million shares, valued at approximately $609 million based on the press time price of $51.6.
Although the decision to buy Coinbase shares at this time may seem risky, given the current regulatory environment and bearish market, Wood has shown that she has rarely been wrong in her investments, becoming one of Wall Street’s most respected gurus.
Coinbase demands clarity from SEC on crypto asset regulation
This is not the first time Coinbase has been targeted by the SEC. In 2022, regulators issued an enforcement action notice to the exchange, citing alleged securities law violations.
However, Coinbase immediately responded to the SEC’s accusations, stating that they lacked arguments and demanding greater clarity from a U.S. court on how the exchange should apply securities laws to digital assets. The court ordered the SEC to respond to the complaint within 30 days, but they have not complied with the orders thus far.
On May 7th, the Third Circuit Court of Appeals requested the SEC to respond within seven days to Coinbase’s complaints and clarify their rules on which assets should be considered securities and how they should be regulated.
Paul Grewal, Coinbase’s Chief Legal Officer, commented on Twitter that the Court of Appeals learned about the SEC’s lawsuit on the same day as the exchange, stating that regulators should not be proceeding with litigation against the crypto industry.
Brian Armstrong, CEO of Coinbase, recently indicated that if the SEC continues to attack crypto companies without providing clear regulation, it will drive them away from the country, as happened with some exchanges like Bittrex.