Cathie Wood’s Ark Invest sold out positions in Coinbase (NASDAQ:COIN) after the Securities and Exchange Commission (SEC) launched an investigation of the company. Three ARK funds sold their positions on July 26 as COIN stock fell 21% to $53 per share. The shares recovered slightly in pre-market trading July 27, but they’re still down almost 80% on the year. The ARK funds are estimated to have lost $283 million on their Coinbase positions. Wood had been a strong supporter of COIN stock.
Coinbase wasn’t the only losing trade Wood made July 26. The ARK Fintech Fund (NYSEARCA:ARKF) sold shares in Robinhood Markets (NASDAQ:HOOD), the free securities trading platform. Robinhood is down 53% in 2022.
Why Sell?
The SEC may have been responding to a Friday blog post by Coinbase Chief Legal Officer Paul Grewal denying the platform was selling securities. The post came shortly after a former employee was arrested for insider trading of coins that had not yet been listed on the platform.
The case sparked a tug of war between the SEC and the Commodity Futures Trading Commission (CFTC) over jurisdiction. CFTC Commissioner Caroline Pham argues utility tokens are not securities, and her agency should regulate them. She called the SEC’s action “regulation by enforcement.” The assumption of crypto boosters is that if the CFTC were regulating coins, it would slowly establish simple rules they could easily follow.
What Comes Next for COIN Stock?
The value of all cryptocurrency recently fell below $1 trillion. Bitcoin prices are down about 7.5% over the last week, but many other coins have fallen further.
Despite the ARK Innovation ETF (NYSEARCA:ARKK) losing more than half its value in 2022, the flagship fund continues to attract new investors convinced its strategy of buying “disruptive technology” can still achieve outsized returns. One of Wood’s ARK funds did have a winning trade on July 26, selling medical clinic 1Life Healthcare (NASDAQ:ONEM) after Amazon (NASDAQ:AMZN) agreed to buy it.
On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
