A trader has banked millions of dollars with an options bet against Coinbase placed just a day before the Securities and Exchange Commission (SEC) issued its suit against the exchange. Earlier this week, the regulator also filed charges against Binance.
The trade, made on Monday morning, was spotted by Unusual Whales and was placed via multiple put options bets with a target price of $50 and a total premium of $107,000. The trader is estimated to have made more than $25 million on the trade.
Coinbase’s share price was down by nearly 19% on Tuesday morning. The stock began crashing on Monday when rival exchange Binance received its own suit from the SEC and as much as $81 billion worth of crypto was traded.
Bitcoin ended 5% down on the day with as much as $300 million worth of liquidations, most of them on the long side. This activity made for one of the most intense days in crypto this year.
Coinbase insiders are still offloading shares
Meanwhile, Cathie Wood of Ark Invest has bought the dip, buying nearly 420,000 Coinbase shares for around $21 million. Her purchase comes after having sold 160,887 Coinbase shares last March for $13.5 million.
Coinbase is down more than 77% since going public and its insiders have been selling stock on a regular basis, netting more than $1.2 billion so far. Company insiders — Brian Armstrong included — have continued to sell their stock this year, offloading more than $28 million in total. Armstrong has personally sold more than 29,000 shares, making over $1.7 million on last May’s sale alone.
Coinbase lost $2.6 billion last year and is still losing money, albeit at a slower rate. It lost $69 million in the first quarter of this year. The company’s financials show that so far, the company has successfully stayed afloat by selling its stock while taking on debt. It currently has up to $3.4 billion in debt and $119 million in crypto debt.
Famous short-seller Jim Chanos describes Coinbase as symptomatic of the predatory junkyard that is crypto.