Cathie Wood Cites SEC Securities Warning in Dropping Coinbase Stock

By André Beganski

Ark Invest CEO Cathie Wood confirmed Monday that the Securities and Exchange Commission’s (SEC) labeling of nine tokens traded on Coinbase as unregistered securities prompted the firm to sell a portion of the shares it held in the cryptocurrency exchange.

The CEO said the SEC’s claim, which came just a handful of days prior, sparked a degree of regulatory “uncertainty” for the crypto industry, according to Bloomberg. 

On July 26, Ark Investment sold over 1.4 million shares in Coinbase worth $75 million. According to the fund’s website, Wood’s company still holds over $451 million worth of shares in the company.

Ark Investment has had a history of buying Coinbase stock since it debuted on the Nasdaq in April of 2021. By the end of June, it was the third-largest shareholder of Coinbase, holding 8.95 million shares, Bloomberg reported.

Wood said she made the move because the price of shares in Shopify had meanwhile fallen and seemed like a favorable alternative amid confusion over how Coinbase would deal with regulators.

Wood told the financial news service that she questioned how many tokens Coinbase would have to delist from its exchange if the company decided not to register them, and how the company’s business model could be impacted if it did.

She also clarified that charges the SEC levied against individuals for allegedly running an insider trading scheme did not influence Ark Investment’s decision to sell shares in Coinbase. One of the people charged in the case is a former Coinbase product manager who had prior knowledge of tokens that would be newly listed on the exchange.

Since the firm parted with some of its holdings in Coinbase, the exchange’s stock price has increased by 84% from $52.93 on July 26 to $97.67 as of this writing. The stock recently rallied on an announcement that Coinbase struck a deal with asset manager Blackrock, providing cryptocurrency trading technology to institutional investors on Blackrock’s Aladdin platform.

Even though Coinbase has notched strong gains in its stock price as of late, shares of the company are still down 61% from the beginning of this year, when they went for around $251 per share on Wall Street.

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