Cathie Wood’s ARK Invest sells $75M worth of Coinbase shares due to poor performance

AArk Invest’s trading data for July 25 shows that it sold over 1.41 million Coinbase Global Inc shares due to poor stock performance amid the bear market and an ongoing investigation by the SEC.

Coinbase shares closed at $52.93 on July 25, after three Ark funds sold off part of their portfolio. Details of the sales were made available in its intra-day trade sheet. 

ARK Innovation ETF (AARK) sold 1,133,495 shares, ARK Next Generation Internet ETF (ARKW) sold 174,611 shares, while ARK Fintech Innovation ETF (ARKF) sold 110,218 shares. A total of 1418324 Coibase shares were sold — representing 2.04% of its investment in the exchange.

Ark Invest’s play in the COIN Shares

On April 14, 2021, Coinbase became the first cryptocurrency exchange to go public following its Nasdaq debut. Its share price went as high as $400 on launch day but has since declined to around $52, representing a more than 85% price decrease.

Cathie Wood’s Ark Invest made an initial purchase of 749,205 shares amounting to $246 million through its AARK, ARKW, and ARKF funds on the first day of trading.

Following a low first-quarter report of the exchange, its share price declined to $53.72 on May 12, 2022. Ark Invest took the opportunity to increase its holdings by a total of 546,579 shares worth about $2.9 million.

The recent decline in trading volumes and earnings of Coinbase may have turned Ark’s bias from buying to selling. Hence, on July 27, the investment fund announced in its trade notification newsletter that it had completed the sales of 1,418324 Coinbase shares amounting to $75 million. 

SEC investigating Coinbase 

The declining price of the COIN share may be linked to a growing rift between Coinbase and SEC. Following allegations against former Coinbase product manager Ishan Wahi for insider trading, the SEC launched an investigation on the class of assets listed on the exchange.

In a July 21 complaint filed against Ishan and his accomplices, the SEC alleged that nine of the digital assets involved in the crime were securities. In response, Coinbase said that its review process aims to keep securities off the platform. Coinbase also advised the SEC to provide a clear regulatory framework for the crypto industry. 

The SEC is now probing Coinbase to ascertain if it intentionally let Americans trade digital assets that were not registered as securities. According to Bloomberg News, the exchange’s increased listings may have drawn the attention of the U.S. watchdog.