South Korea’s Pension Funds Buys 280K Coinbase Shares

A public pension in South Korea and one of the world’s most significant pension funds, the National Pension Service (NPS), just bought over 280,000 shares of the global crypto exchange Coinbase in the third quarter of 2023, an investment that has gained 39% in value since the purchase.

In November 2023, a stock holdings report with the United States Securities and Exchange Commission (SEC) revealed that the NPS acquired 282,673 Coinbase (COIN) shares in the third quarter of this year.

Overview

Data from TradingView showed that the investment was worth $27.7 million based on Coinbase’s previous recorded close of $98.15. The SEC filing highlighted that the NPS has acquired its Coinbase stock batch for about $19.9 million, which implies that the pension fund’s profit equalled $7 million or 39 %. Experts at Bitcoin Apex Official mentioned that the recent Coinbase investment by South Korea’s public fund marks the first time that assets under management reached $755 billion and made any crypto-related security part of its investment portfolio.

The local media outlet revealed that the national pension fund has a policy in place not to directly invest in crypto assets like Bitcoin (BTC) due to volatility, although in 2021, South Korea’s National Assembly criticised the NPS for indirectly investing in a crypto-related business. In response, the pension fund maintained that it exclusively invested in the exchange and did not consider cryptocurrencies part of its investment target.

Coinbase Stock Growth

In 2023, Coinbase stock has seen significant growth, surging to as high as $110 per share in July. According to data at TradeView, COIN shares have added value of close to 170% year-to-date after starting 2023 at around $37. In September 2021, the stock was 74% down from its all-time highs above $300. Coinbase posted a net loss of $2 million for the quarter, compared to $545 million in the same period last year.

Crypto-curious investors were excited by the potential approval of spot BTC exchange-traded funds in the United States (US), potentially leading to increased investment levels. The recent price surge in BTC has spurred the growth in crypto-related stocks. According to CoinGecko data, BTC climbed 5.2% over the past 24 hours to trade at $37,446 around Thursday noon in Asia. The largest crypto market cap has risen 126.3% so far this year.

Coinbase’s Legal Battle

Despite Coinbase facing a lawsuit from the US SEC filed in June 2023, the exchange had massive growth this year. The lawsuit alleged that the exchange had never registered as a broker, national securities exchange or clearing agency and evaded the disclosing scheme for securities markets. The SEC alleged that several tokens offered by Coinbase qualified as securities. The lawsuit also alleged that Coinbase operated as an unregistered security broker since 2019, almost two years before its initial public offering in April 2021.

According to SEC Chair Gary Gensler, Coinbase deprived its customers of critical protections that prevent fraud and manipulation and avoided proper disclosure and safeguards against conflicts of interest. Director of the SEC’s Division of Enforcement, Gurbir Grewal, said’ “As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities but deliberately refused to follow them.” Coinbase disputed the SEC’s authority in crypto and puzzled many in the crypto industry because the exchange is a publicly listed company.

Chief Legal Officer at Coinbase, Paul Grewal, said, “SEC’s reliance on an enforcement-only approach without clear rules for the digital asset industry is hurting America’s economic competitiveness.” Grewal added, “The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.” Coinbase’s lawsuit came a day after the SEC sued Binance for violating securities law and commingling customer’s funds.

The SEC filed a suit against Binance, its US platform and CEO and pressed 13 charges, including unregistered offers and sales of the BNB and Binance USD tokens. The SEC alleged that Binance failed to register its Binance.com platform as an exchange or broker-dealer clearing agency. The SEC further claimed that Binance and BAM Trading – Binance.US could not register as an exchange, broker and clearing agency. Binance’s CEO was sued as a controlling person. The suit noted, “Defendants have enriched themselves by billions of US dollars while placing investors’ assets at significant risk. […] Defendants have engaged in multiple unregistered offers and sales of crypto asset securities and other investment schemes.”

Binance CEO Changpeng Zhao responded to Coinbase’s lawsuit by taking a dig at the SEC. Zhao said, “If you have to pick a fight with everyone, maybe you are the one at fault.”

Regardless of the United States Securities and Exchange Commission lawsuit against Coinbase, the exchange’s third quarter resulted in positive results amid multi-year low levels of volatility. The move by South Korea’s pension funds has increased investment since purchasing Coinbase shares.