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Woods' ARK Invest Amplifies Coinbase Portfolio Despite Regulatory Challenges

ARK Invest purchases more Coinbase shares amidst its legal troubles with the SEC, displaying continued faith in the exchange's potential.

caption : Ark Investment Management CEO Cathie Wood

Fri, 09 Jun 2023, 00:23 am UTC

Unfazed by the recent regulatory issues surrounding Coinbase, Cathie Woods' pioneering investment firm, ARK Invest, bolstered its stake in the cryptocurrency exchange. This move came on the heels of the exchange's stock experiencing a slump, primarily precipitated by a colossal legal battle initiated by the Securities and Exchange Commission (SEC).

Through its trio of exchange-traded funds—ARK Innovation ETF, Next Generation ETF, and Fintech Innovation ETF—ARK acquired a substantial 419,324 additional shares of Coinbase, estimated to be around $21.5 million based on Tuesday's closing stock price of $51.51. With this acquisition, ARK's Coinbase stockpile swells to nearly 11.75 million shares, earning it the silver medal in the race of Coinbase's largest stakeholders, second only to Vanguard Group.

Woods and Coinbase share a common thread of regulatory tussles with the SEC. Earlier this year, Woods submitted a third proposal to launch a Bitcoin spot ETF to the SEC after her first two attempts were shot down. Currently, the SEC has greenlighted four Bitcoin futures ETFs, yet none for the spot market.

Coinbase's stock value nosedived 22% to less than $46 following the SEC's lawsuit, which accused the exchange of operating an illicit, unregistered trading platform and offering unregulated securities.

The digital currency exchange has expressed frustration with the SEC's lack of clear guidance. This April, Coinbase sought the aid of a federal court to coerce the SEC into releasing more precise crypto regulation guidelines. Despite lodging a request for regulatory rulemaking to the SEC last summer, Coinbase didn't receive any response. However, a federal judge has ordered the SEC to answer Coinbase's plea within a week.

Coinbase's legal skirmish echoes a lawsuit against Binance, the largest cryptocurrency exchange globally, accused of violating security laws, including unregistered crypto transactions and intermixing customer funds. Binance has refuted these allegations, arguing that the SEC is overstepping its boundaries.

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