ARK Invest Buys Coinbase Shares Despite Wells Notice
Terrill Dicki Mar 25, 2023 10:18
Investment management firm ARK Invest, led by Cathie Wood, has resumed buying shares of Coinbase, purchasing 268,928 shares worth $17.88 million through its ARKK Innovation and ARKW Next Generation Internet exchange-traded funds on March 23. This came just a day after Coinbase's stock price fell by 21% due to news of the company receiving a Wells notice from the Securities and Exchange Commission (SEC).
Two days previous to the announcement that the Wells notification was forthcoming, ARK Invest had already sold 160,887 of its Coinbase shares using the ARK Fintech Innovation ETF. When this transaction took place in 2023, it was the first time that any of ARK Invest's ETFs had sold Coinbase shares. In spite of the decline in Coinbase's share price, this transaction represented the first time that any of ARK Invest's ETFs has ever sold Coinbase shares. It is essential to take into consideration the fact that authorities and insiders at Coinbase participate in 10B5-1 selling plans months in advance, and that this tranche of sales was carried out in line with a trading strategy that was formed on August 16.
After the publication of the Wells notice, which warned of possible enforcement action by the SEC, the share price of Coinbase has not been able to recover to its former level. This is likely due to the fact that the SEC is likely to take enforcement action. Brian Armstrong, the chief executive officer of the firm, had also sold shares in his company between March 17 and March 20, only a few days before the Wells notice and the consequent decline in share price. These sales took place between March 17 and March 20.
Following the settlement that the SEC reached with Kraken on February 9, in which it was alleged that Kraken's staking services qualified as securities, Coinbase has repeatedly asserted that its staking products are fundamentally different from Kraken's products. This is in response to the allegations that Kraken's staking services qualified as securities. After the conclusion of settlement talks between the SEC and Kraken, Coinbase made its claims.
In conclusion, ARK Invest has continued to purchase Coinbase shares despite receiving information from Wells and a decline in the price of Coinbase's shares. This is the case even if the price of Coinbase's shares has fallen. Before the Wells notice, Coinbase executed a trading plan that it had designed on August 16 in order to sell 160,887 shares from its ARK Fintech Innovation ETF. Coinbase has made the assertion that its staking products do not constitute securities in any way.
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