Investment management firm ARK Invest, led by Cathie Wood, has resumed buying shares of Coinbase just a day after the crypto exchange’s stock price fell due to news of a Wells notice from the Securities and Exchange Commission (SEC). On March 23, ARK Invest purchased 268,928 Coinbase shares worth $17.88 million through its ARKK Innovation and ARKW Next Generation Internet exchange-traded funds. Only two days earlier, before the news of the Wells notice was announced, ARK Invest had sold 160,887 Coinbase shares from its ARK Fintech Innovation ETF. This was the first time in 2023 that any of ARK Invest’s ETFs had sold Coinbase shares.
Coinbase’s share price has not recovered since the announcement of the Wells notice, which warned of potential enforcement action by the SEC. The news caused Coinbase shares to drop by around 21%. On March 23, shares in Coinbase reached a low of $64.27, but had risen to $66.87 during after-hours trading at the time of writing, according to Barron’s.
Coinbase CEO Brian Armstrong also sold shares in his company between March 17 and March 20, just days before the announcement of the Wells notice and the drop in share price. However, SEC filings reveal that Coinbase insiders enter into 10B5-1 selling plans months in advance, and this particular sale was part of a plan adopted on August 16.
While the SEC reached a settlement with crypto exchange Kraken in February 2023 over allegations that its staking services were securities, Coinbase has argued that its staking products are fundamentally different from Kraken’s and cannot be considered universally as securities.