Cathie Wood's Ark Invest bought more Coinbase shares on Tuesday — the same day the crypto exchange operator was sued by the United States Securities and Exchange Commission, causing its stock to decline sharply.

Ark's flagship exchange-traded fund, Ark Innovation ETF, purchased 329,773 shares of Coinbase, according to an update from the fund manager's trading desk on Tuesday. Its Ark Next Generation Internet ETF bought 53,885 shares, and Ark Fintech Innovation ETF purchased 35,666 shares. Together, the purchases were worth $21.64 million, based on the stock's closing price of roughly $52 on Tuesday.

The purchases come as Coinbase's stock price fell as much as 21% before closing down 12% on the back of the SEC lawsuit. The SEC alleged on Tuesday that the exchange violated rules by allowing users to trade many tokens that were not registered as securities. Coinbase responded that it would take the legal battle to the Supreme Court.

Coinbase's share price dropped sharply after the SEC sued the crypto exchange. Source: TradingView

Ark remains bullish on Coinbase. The crypto exchange's shares are Ark's fifth-largest stock holding across its funds. Ark's funds hold nearly $650 million worth of Coinbase stock and their average holding cost is between $239 and $255, according to data.