(Bloomberg) -- Cathie Wood’s funds boosted their holdings of Coinbase Global Inc. as shares slumped after the Securities and Exchange Commission accused the company of operating an unlawful exchange.

Three Ark Investment Management LLC funds, including Wood’s flagship Ark Innovation ETF, bought 419,324 shares of the cryptocurrency exchange operator Tuesday as it tumbled as much as 21%, data compiled by Bloomberg show. Shares of the company rebounded to rise as much as 4.2% in premarket trading on Wednesday.

Ark is the fourth-largest holder of Coinbase and has been adding to its stake on dips for nearly a year despite crypto-market volatility caused by issues including the collapse of Sam Bankman-Fried’s empire, a widening US regulatory crackdown, and a spate of bankruptcies among companies in the industry.

The SEC on Tuesday alleged Coinbase evaded the regulator’s rules for years by letting users trade numerous crypto tokens that were actually unregistered securities. The exchange operator responded by saying it’s willing to take the legal fight all the way to the Supreme Court. 

The crackdown on Coinbase has expanded, with state regulators from California to New Jersey demanding the company halt its so-called staking service, which offers customers a return for letting their tokens be used to facilitate blockchain transactions. The SEC made similar charges against Binance Holdings Ltd. Monday.

Ark sold some of its Coinbase holdings in July, citing regulatory uncertainty after the SEC deemed some tokens listed on the US exchange’s platform as securities. Even after Tuesday’s slide, Coinbase shares are up almost 60% from their record low hit in December.

Wood’s flagship fund has risen 37% this year, compared with a gain of 33% for the Nasdaq 100 Index and a 12% advance for S&P 500. Ark Innovation ETF slumped 67% last year.

Wood’s firm held more than 11.7 million Coinbase shares, or 6.3% of shares outstanding, as of March 31. Earlier this year, she reiterated her price target of $1 million for Bitcoin, the largest cryptocurrency, which currently trades around $27,000. 

--With assistance from Subrat Patnaik.

(Updates to add stock move in paragraph two.)

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