Cathie Wood, CEO of ARK Invest sold Coinbase shares for the second time in 2023. ARK’s sale of Coinbase shares comes at a time when the exchange’s stocks (COIN) soar over $90.
Coinbase executives, including CEO Brian Armstrong, are also seen selling off a large sum of shares as the company’s shares rally in recent months.
Considering Coinbase’s future is looking up with their recent partnership with the likes of BlackRock and Fidelity in their filings with the SEC for their ETFs, why is Wood Selling her shares? Is she avoiding market uncertainty? Or, does she expect share prices to stagnate?
Coinbase had a rough June. The exchange was hit with a lawsuit filed against it by the US Securities and Exchange Commission for allegedly trading in unregistered securities. Although Coinbase’s IPO was approved by the regulating body two years prior, the SEC’s lawsuit posed a threat to Coinbase’s future.
However, major financial institutes such as BlackRock and Fidelity have been attempting to get SEC approval on their spot ETF applications.
The two major asset management companies, among others, placed Coinbase as their surveillance partner on their applications in hopes to land the SEC approval. In turn, Coinbase found a lifeline in the crypto market, counterbalancing the threat posed by the SEC lawsuit.
In most recent news, evidence points towards SEC approving the aforementioned ETF applications which boarded well for Coinbase’s stock, causing it to peak at $90.9.
However, Cathie Wood, CEO of Ark Investment has reportedly sold 135,152 Coinbase shares worth around $12 million on Tuesday. This sale marks the second time Wood’s company is seen selling Coinbase stock.
On March 11th, ARK Fintech Innovation ETF sold off 160,887 Coinbase shares worth $13.5 million, at around $84 per share.
Moreover, numerous Coinbase executives, including Brian Armstrong, were seen selling Coinbase shares. In July alone, Coinbase execs sold 88,058 shares for $6.9 million. In June, the company‘s chief accounting officer Jennifer Jones sold 74,375 shares for $5.2 million.
Despite the news about Coinbase stock offloading, ARK Invest’s future is still very much tied to Coinbase. Earlier this month, ARK refiled for its spot ETF application, adding Coinbase as the company’s surveillance partner. The move follows BlackRock’s lead, as the world’s biggest asset management firm did the same in order to quench the SEC’s thirst for a guarantee that these financial institutions won’t manipulate the market.
BlackRock only had one ETF application rejected by the SEC, as opposed to 575 others approved. The SEC, at the time, cited their reason for rejection was that BlackRock didn’t provide enough transparency regarding their financial operations in the market.
Now, companies like BlackRock and ARK are entering security-sharing agreements (SSA) with the SEC to give the regulating body access to their operations, using major exchanges, namely Coinbase as their surveillance partner.
If Coinbase is rumored to be doing very well in the future following potential SEC approvals of spot applications, why are Wood and Coinbase executives selling shares en mass?
The obvious answer would simply be for profit. The exchange has seen its fair share of turbulence due to the SEC lawsuit, which, in turn, created uncertainty about the company’s future. Now that the exchange’s stocks are rising in value, it would make sense to sell them at a profit when possible.
Clearly, both ARK Invest and Coinbase execs still have considerable sums of shares in the company, so they’re not completely jumping ship. But the question is: Why wait until good news comes to sell stocks instead of staying around for more profit in the future?