Cathie Wood's funds dumped Coinbase stock for the first time in 2022 as the SEC launched a probe into the crypto platform's business activities

• Funds run by tech investor Cathie Wood sold 1.41 million shares in Coinbase on Tuesday.
• The transactions took place as news of an SEC probe into the crypto trading platform had emerged.

Funds run by Cathie Wood sold more than 1 million shares of Coinbase on Tuesday, after news emerged that the crypto trading platform is under investigation by the Securities and Exchange Commission.

Three of the high-profile tech investor's funds sold a total of 1.4 million shares of Coinbase on July 26, according to Wood's website. Her flagship fund, Ark Innovation ETF, or ARKK, sold 1.133 million shares and the remaining transactions occurred in the ARK Next Generation Internet ETF and the Ark Fintech Innovation ETF.

Those were the first sales of Coinbase stock by Wood's funds in 2022. Shares plunged 21% on Tuesday following a Bloomberg report that the SEC is investigating whether Coinbase improperly allowed US investors to trade digital assets that should have been registered as securities. The report was first published late Monday.

With Coinbase closing at $52.93 each on Tuesday, the shares sold by Wood's funds were worth around $75 million. At the end of June, Ark had about 8.95 million shares of Coinbase, making it the third-biggest shareholder, according to data compiled by Bloomberg.

"[We] are confident that our rigorous diligence process—a process the SEC has already reviewed—keeps securities off our platform, and we look forward to engaging with the SEC on the matter," Coinbase's Chief Legal Officer Paul Grewal said on Twitter late Monday.

Last week, the largest crypto trading platform in the US in a letter to the SEC called on the agency to provide clearer rules on which assets it considers securities.

Coinbase shares have lost about 79% of their value during 2022 and the ARKK fund has dropped 54% as part of a broader selloff in tech stocks.