Bitcoin (BTC) quickly bounced back after tumbling to a three-month low of less than $25,500 on Tuesday following news that Coinbase (COIN), had been sued by the U.S. Securities and Commission Exchange (SEC) on allegations of violating federal securities law. This followed a similar suit against Binance on Monday. Already on its heels following the Binance suit, bitcoin sank further on the Coinbase action before recovering throughout the day to again top $27,000. It’s retreated a bit overnight Wednesday to the current $26,800, still up 4% over the last 24 hours. “The price action is certainly encouraging and shows the market remains confident on the outlook for the space despite attempts to slow it down by way of a path to regulation that has been less than clear,” said LMAX Digital in a morning note. The Coinbase lawsuit also listed 13 tokens which could be deemed as securities, including Cardano’s ADA, and Polygon’s MATIC, both of which are down 5% over the past 24-hours.
Cathie Wood’s Ark Investment Management, the second-largest holder of Coinbase Global (COIN) stock, added to its investment in the crypto exchange after the SEC lawsuit Tuesday sent the share price tumbling. ARK bought 419,324 shares of Coinbase, which would be worth around $21.6 million based on Tuesday’s closing price of $51.61 (down 12% on the session). The purchase, the first since May 3, took Ark’s total Coinbase holdings to 11.44 million shares, valuing the position at around $590 million.
In a different case involving the SEC and Coinbase, the U.S. Court of Appeals for the Third Circuit has ordered the agency to clarify its position on a rulemaking petition from the exchange. In April, Coinbase filed an Administrative Procedure Act Challenge, asking the court to force the SEC’s hand and get the regulator to respond to its 2022 petition for formal rule making in the digital assets sector. With yesterday’s ruling, the SEC has been ordered to explain within 7 days if it intends to decline Coinbase’s request, the reasons for such a decision or a timeline of when it expects to come to a decision.
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User withdrawals from Coinbase have soared this week following SEC suits against both itself and Binance.
Blockchain data from crypto intelligence firm Nansen shows that Coinbase net outflows over the 24-hour period ending midday Tuesday totaled $600 million, with $1.38 billion of cryptocurrency exits against just $771 million in deposits. This data excludes bitcoin (BTC) transfers.
It’s the second wave of net withdrawals, according to Nansen, which also detailed $450 million exiting on Monday in the hour following the SEC lawsuit against Binance.
The initial withdrawal surge on Binance was even larger, with net outflows surpassing $700 million on Monday, according to data compiled by 21Shares.
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