Cathie Wood Is Buying the SEC Lawsuit Dip in Coinbase (COIN) Stock


  • Cathie Wood just bought the dip in Coinbase (COIN) stock as the U.S. Securities and Exchange Commission (SEC) files a suit against the company.
  • The SEC believes Coinbase is selling unregistered securities and combining functions that should be separate.
  • Republicans generally support the crypto industry.
Flags of Coinbase and NYSE flying in the wind.
Source: rarrarorro /

Cathie Wood’s Ark Invest just bought the drop in Coinbase (NASDAQ:COIN) stock. This move comes despite the fact that the crypto industry is going to war with regulators.

More specifically, the U.S. Securities and Exchange Commission (SEC) sued Coinbase on June 6. The SEC alleges that the company is acting as an unregistered securities exchange, among other things.

Yesterday, COIN stock fell 12% on the news. However, shares did recover by about 3% overnight, opening today at $53.28 per share. Currently, Coinbase has a market capitalization of around $12 billion on 2022 revenue of $3.2 billion.

COIN Stock: Crypto Winter Becomes Crypto War

Cathie Wood’s ARK Innovation ETF (NYSEARCA:ARKK) bought almost 330,000 shares of COIN stock on a day when it was selling biotech stocks Crispr Therapeutics (NASDAQ:CRSP), Exact Sciences (NASDAQ:EXAS) and 10x Genomics (NASDAQ:TXG). Wood has predicted that crypto firms will soon exit the U.S. but she remains bullish on the sector in general.

The recent Coinbase suit filed by the SEC was the second suit against a major crypto exchange from the agency this week. Specifically, the SEC also unveiled charges against Binance and its CEO and founder Changpeng Zhao on June 5.

Coinbase went public back in 2021, around the time that Gary Gensler was confirmed as Chair of the SEC. Gensler’s new Coinbase suit came the same day House Republicans held a hearing with the company’s top lawyer. Per Politico, House Republicans are proposing legislation “that would overhaul crypto rules by reining in the SEC and shifting greater responsibility to the much smaller Commodity Futures Trading Commission.”

The SEC’s 101-page complaint asserts that Coinbase illegally “merges three functions that are typically separated in traditional securities markets […] brokers, exchanges, and clearing agencies.” The SEC says the company has “for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have constructed for the protection of the national securities markets and investors.”

Gensler told CNBC that the U.S. dollar, the euro and the yen are all already digital currencies. “We don’t need more digital currency,” said Gensler. The price of Bitcoin (BTC-USD) — the most popular cryptocurrency — bounced off $25,000 earlier this year and rose from there.

Crypto advocates like Ryan S. Adams reacted angrily to news of the Coinbase suit. Adams called Gensler bad for the SEC and suggested that investors “might consider shorting T-Bills.”

What Happens Next?

So, what’s in the future for Coinbase and COIN stock?

Crypto has become a political football, with Gensler and President Joe Biden’s administration arrayed against Republicans and the crypto industry. When it comes to COIN and related names, investors should be aware of the risk.

On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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