Cathie Wood's Ark Invest Stands Firm Buys the Coinbase Dip Amid Regulatory Headwinds

Cathie Wood’s ARK Invest Stands Firm, Buys the Coinbase Dip Amid Regulatory Headwinds

Cathie Wood’s investment firm, Ark Investment Management LLC, has boosted its holdings of Coinbase Global, Inc. (NASDAQ: COIN), even as shares slumped following accusations by the Securities and Exchange Commission (SEC) of operating an unlawful exchange.

What Happened?

Cathie Wood’s flagship fund, the Ark Innovation ETF (NYSE: ARKK), purchased 419,324 shares of Coinbase Global, Inc. (COIN) on Tuesday, taking advantage of the 21% drop in its stock price.

Coinbase, one of the largest cryptocurrency exchanges, has been accused by the SEC of running an unlawful exchange for years. The regulator claims that Coinbase allowed users to trade numerous crypto tokens that were actually unregistered securities, violating the SEC’s rules. In response, Coinbase has expressed its willingness to pursue a legal battle all the way to the Supreme Court.

The regulatory pressure on Coinbase has escalated further, with state regulators from California to New Jersey demanding the suspension of its staking service, which offers customers returns for facilitating blockchain transactions with their tokens.

Ark Invest Increases Stake in Coinbase Amid Market Volatility

Ark Investment Management has been steadily increasing its stake in Coinbase over the past year, even in the face of market volatility caused by various factors, including the collapse of Sam Bankman-Fried’s empire, a growing regulatory crackdown in the United States, and numerous bankruptcies within the industry.

Despite selling some of its Coinbase holdings in July due to regulatory uncertainty, Ark remains the fourth-largest holder of Coinbase.

Cathie Wood’s flagship fund has achieved a 37% gain this year, surpassing the Nasdaq 100 Index’s 33% increase and the S&P 500’s 12% advance. However, the Ark Innovation ETF (NYSE: ARKK) experienced a significant decline of 67% last year.

As of March 31, Wood’s firm held over 11.7 million Coinbase shares, accounting for 6.3% of the outstanding shares. Earlier this year, Wood reaffirmed her price target of $1 million for Bitcoin, the largest cryptocurrency by market capitalization, which is currently trading at around $27,000.