Cathie Wood’s ARK Invest asset-management group took the opportunity to load up on Coinbase Global Inc (NASDAQ:COIN) shares after the Nasdaq-listed cryptocurrency exchange plummeted as much as 26% on Thursday.
Around US$18mln (£14.7mln) worth of shares were added across the ARK Innovation (ARKK) and ARK Next Generation Internet (ARKW) exchange traded funds.
Coinbase shares slid after chief executive Brian Armstrong disclosed that his firm received Wells Notice from the US Securities and Exchange Commission (SEC).
A Wells Notice typically precedes a regulatory enforcement action.
Though Coinbase’s Wells Notice does not disclose many details, the pending enforcement action is likely in relation to the exchange’s altcoin trading and staking services.
Analysts at Jefferies estimate that up to 35% of Coinbase’s revenue is “potentially at risk, depending on the SEC’s course of action”.
Coinbase’s chief legal officer Paul Grewal argues that the SEC has been uncooperative in recent discussions regarding token listings.
“We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead,” stated Grewal, calling the Wells Notice a “disappointing development”.
Given the SEC’s warpath against the cryptocurrency market his year, enforcement action against Coinbase would not come as a shock, even though the firm, as a publicly traded entity, is already highly regulated.
Given Ark Invest’s recent share purchases, Wood evidently sees the potential for Coinbase shares to rebound from the latest hit to its market value.