Key takeaways:
- Exchange platform Coinbase has been hit with many allegations by the SEC.
- Coinbase stock COIN plummets about 13% following the breaking news.
- ARK Invest CEO faces serious challenges as she holds many shares in Coinbase.
YEREVAN (CoinChapter.com) — Cathie Wood, the CEO of ARK Invest, has invested much money and faith in the U.S. crypto exchange Coinbase. But her decisions might become a source of regret in the future.
The Reason Behind Her Fears
Firstly, let’s start from the ground up. The U.S. Securities and Exchange Commission (SEC) accused Coinbase of not properly registering within U.S. regulatory laws.
Furthermore, the commission blames Coinbase for prioritizing profits over investor interest and generating millions of dollars based on “ill-will” mechanisms that break regulatory constraints.
And the market, as expected, responded with a fight or flight reaction that resulted in Coinbase COIN stock losing approximately 13% of its value.
Historically, The SEC has always been unreasonably harsh on crypto, whether justified or warranted.
Additionally, the U.S. regulatory bodies create and impose confusing and somewhat absurd laws and definitions for crypto.
Interestingly, even Cathie Wood recognized the regulatory threat that U.S. companies face. It’s just maybe. She didn’t anticipate the crackdown to happen that soon.
Because of regulatory uncertainty, innovation seems to be leaving the US for more friendly regimes. Unfortunate. I believe it will become an election-year issue. https://t.co/PvqK9W27Fd
— Cathie Wood (@CathieDWood) June 4, 2023Why Cathie Wood HAS to be on high alert
According to Cathie’s portfolio, She holds about 11 million shares of COIN stock. Correspondingly, her Coinbase holdings amount to third in weight across all her funds.
And this, ladies and gents, creates a potential disaster for ARK Invest and Cathie Wood.
Likewise, if COIN continues to lose in worth following this regulatory hell, ARK Investing risks suffering major losses. And these losses will hurt a lot if we consider the amount of faith expressed toward Coinbase by ARK Invest.
However, as of June 6, 2023, Cathie Wood or her firm didn’t respond to the break-neck lawsuit thrown at Coinbase or the subsequent price loss of COIN.
The Bottom Line
Either way, it’s already apparent that crypto in the U.S. sees and will experience struggle.
Cathie Wood is an experienced investor, but her skill or strategy cannot account for the irrational “Witch-Hunt” that the SEC organized.
So be attentive, and Don’t let the Fed catch you with your pants down!
Steer clear.
