A report by the Financial Times revealed that Coinbase has shelved as many as 20 cryptocurrencies, but did not reveal the financial status of its holdings of those assets.

Coinbase listing pushes up the value of assets in which it has an economic interest

Newly listed coins tend to see a spike in price/performance on the day of launch, according to the report; however, in the long run, the asset tends to underperform compared to bitcoin and ethereum, two leading digital assets.

Take the Decentralized Social Token (DESO), created by Nader Al-Naji, for example. DESO has tried to convince the public that it has just raised $200 million from investors like Andreessen Horowitz and Coinbase Ventures.

But that's not the case, as venture capital firms contribute less than half of the project's funding; the rest comes from retail buyers and industry insiders.

After the Coinbase IPO, it was revealed that the asset's price more than doubled and at one point touched a high of $187. This gave early investors the opportunity to dump the asset to unsuspecting public investors who may have thought DESO was a solid investment for them.

Currently, the asset has lost more than 65% of its Coinbase-dominated new high.

Coinbase's Listing Practices Questioned

The case of DESO and other assets in which Coinbase may have a financial interest begs the question of whether its risk department will influence its new coin listing decision process.

According to Coinbase, it does not coordinate the listing decisions of its board of directors or outside investors. It also added that Coinbase Ventures does not influence the types of assets that are listed on the platform.

Speaking about this development, Tyler Gellasch, Executive Director of Healthy Markets, believes that cases of conflict of interest are not being properly identified, disclosed and managed in cryptocurrencies.

Faisal Khan, a cryptocurrency analyst who has been studying why digital assets tend to underperform when listed on Coinbase, said this "raises a lot of questions about whether insiders are selling to retail investors and the conflict of interest between venture capital and exchanges, who work in concert with zero oversight."

Marco Di Maggio, an associate professor at Harvard Business School, also highlighted the conflict of interest of assets in which listed exchanges have a financial interest. According to him, this is due to Coinbase's poor disclosure practices.

As of press time, Coinbase has updated its website to reflect some of its investments in the sector; however, no specific details were provided about whether it owns shares or tokens of these investments.

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