Cathie Wood Also Dumped... Circle, Stock Price Plunge Warning Light

▲ Cathie Wood / AI-generated image

ARK Invest, led by Cathie Wood, has engaged in risk management by selling a large portion of its shares in stablecoin issuer Circle.

According to CoinGape, a virtual asset specialized media outlet, on April 17 (local time), ARK Invest announced through its trading report that it had reduced its holdings in Circle Internet Group (CRCL) and Bullish (BLSH) shares. The total sale amount is reportedly over $2.5 million. This move by ARK Invest comes shortly after Circle became embroiled in a legal dispute regarding its failure to freeze hacked funds, drawing significant attention from investors.

Circle was sued in a U.S. federal court in Massachusetts in connection with the $280 million hack of Drift Protocol that occurred on April 1. More than 100 investors, including Joshua McCollum, alleged that Circle had the technical capability to freeze the stolen funds but failed to do so. According to the complaint, the attackers used Circle's Cross-Chain Transfer Protocol (CCTP) to transfer approximately $230 million worth of USDC from Solana to Ethereum.

Investors cited Circle's past instance of freezing 16 USDC wallets in another civil case as evidence. At that time, Circle was evaluated as having sufficiently demonstrated not only its technical capabilities but also its authority to control funds. However, in the recent Drift Protocol hack, Circle is criticized for taking no action during the 8 hours the funds were moving, which exacerbated the damage. Attorneys from Gibbs & Mure Law Firm pointed out that Circle's inaction ultimately aided the hackers in laundering assets.

Due to this hacking incident, Drift Protocol's total deposited assets were halved from $550 million to below $250 million. Analysts believe that a North Korean-backed hacking group is highly likely to have orchestrated this attack. The stolen funds were identified as having been laundered through Tornado Cash. Circle finds itself in a dilemma between concerns about centralization that could arise from abusing its fund-freezing authority and the need for regulatory compliance.

Circle's stock price is experiencing increased volatility due to the lawsuit news coinciding with ARK Invest's selling spree. Cathie Wood had previously maintained Circle as a core asset in her portfolio, but it is understood that she took immediate action as legal risks became apparent. The market anticipates that the outcome of this lawsuit will set an important legal precedent regarding the scope of user fund control for stablecoin issuers and is closely monitoring the trial proceedings.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*