Coinbase Global Inc. COIN shares plunged 14.05% on Thursday on the SEC issuing a “Wells Notice,” a formal declaration from the regulator that it intends to recommend an enforcement action.
The company clarified that the notice was with regard to an undefined portion of its listed digital assets, its staking service “Coinbase Earn,” “Coinbase Prime” and “Coinbase Wallet.”
What Happened: On Tuesday, Cathie Wood’s Ark Invest, through its Ark Fintech Innovation ETF ARKF, sold 160,887 shares of Coinbase, valued at $13.5 million worth based on the session’s closing price of $83.99.
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The news of the SEC notice came a day after this massive sale, raising the eyebrows of many market participants.
“Wild how Cathie Wood and $ARKF sell $COIN for the first time in a while the day after the SEC letter hits,” said trader Ryan Rozbiani in a tweet. He also noted that the company’s CEO and chief legal office also sold shares ahead of the development.
Wild how Cathie Wood and $ARKF sell $COIN for the first time in a while the day before the SEC letter hits. Also, the CEO and CLO (chief legal officer) sell shares yesterday and today. Hmm pic.twitter.com/7Zbzoze4TX
— Ryan Rozbiani (@RyanRozbiani) March 23, 2023
He may have a point there. After a sale of a big chunk of shares in July 2022, Wood’s firm has been a regular buyer of Coinbase till Tuesday’s liquidation.
Buying The Dip? Ark, to its credit, typically buys shares of the staples in its portfolio whenever they pull back sharply and sells them when there is a run-up. Following Wednesday’s slide, Ark through its ARKF and flagship Ark Innovation ETF ARKF, bought 268,928 shares valued at $17.83 billion.
Coinbase is ARKK’s fourth biggest holding with a weighting of 7.51% in the ETF and it is the top holding of ARKF with a 12.24% weighting. Between the two funds, Ark holds about 15.74 million shares of Coinbase.
Coinbase closed Thursday’s session down 14.05% at $66.30, according to Benzinga Pro data. The stock is up about 87% so far this year.
Benzinga illustration.
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