Cathie Wood On Why She Cut Coinbase Stake

Ark Investment Management's decision to sell a significant amount of Coinbase Global Inc COIN shares recently was tied to regulatory uncertainty in the crypto industry, founder and CIO Cathie Wood said on Monday.

What Happened: Ark's sale of $75 million of COIN shares last month came after the U.S. Securities and Exchange Commission (SEC) alleged that the cryptocurrency exchange had listed unregistered securities, Wood said in an interview with Bloomberg TV.

Ark dumped a total of 1.42 million COIN shares on July 27, sending the stock price tumbling 21% on the day to $52.93. ARK Innovation ARKK sold 1.13 million shares, while the ARK Next Generation Internet ETF ARKW sold 176,611 shares and the ARK Fintech Innovation ETF ARKF sold 110,268 shares.

It was unclear how many tokens Coinbase would have to delist if it didn’t register them with regulators, or how the exchange’s business model would change if it did register them, Wood said to Bloomberg.

She explained that the uncertainty around the SEC probe led Ark to swap Coinbase shares for Shopify Inc SHOP, which also fell on the same day.

See Also: Cathie Wood Defends Coinbase Allocation: Crypto Revolution 'Will Not Be Stopped'

Even after the sale, Ark remains one of Coinbase’s largest shareholders, holding over 7.1 million shares. The firm believes that BlackRock’s recent partnership with Coinbase is a “strong signal” that Bitcoin BTC/USD deserves a place in well-diversified portfolios.

“Based on daily returns across asset classes during the past ten years, our analysis suggests that an allocation to bitcoin in well-diversified portfolios should range from 2.55%, when minimizing volatility, to 6.55%, when maximizing returns per unit of risk,” stated Ark in its weekly newsletter.

Price Action: Coinbase shares traded 0.082% higher after hours, according to data from Benzinga Pro.

Photo courtesy: Ark Invest