A Financial Times analysis found that Coinbase, oneworld’s world’s largest crypto exchanges, has listed at least 20 crypto tokens for trading while holding an investment in a related project. However, Coinbase disclosed only 12 holdings of its in-house investments arm, Coinbase Ventures. Andreessen Horowitz, one of Silicon Valley’s leading venture capitalValley’sis an early investor in Coinbase and holds a seat on the company’s board. The V.C. firm hascompany’sested in at least a dozen projects whose tokens later gained approval to trade on Coinbase.
After the Financial Times sent a detailed list of questions to Coinbase, the company’s Chief Legal Officer, Paul Grewal, published a blog post in which he promised to make its holdings “even mo”e transparent.” Furth”rmore, Coinbase argued that it did not coordinate listing decisions with its board or outside investors. The company added that Coinbase Ventures, its start-up investment arm founded in 2018, has “no infl”ence” on dec”sions about asset listings.
Typically, even in the crypto space, early investors earn the most on an exchange listing. In this respect, Coinbase favors itself in the positive decision for a listing. That sounds like a conflict of interest, doesn’t it?
Coinbase is the largest crypto exchange in the U.S., with more than 7 million monthly transacting users. In the announcements of new token listings, Coinbase typically includes the statement that “Coinbase Ventures may be an investor” in the token operator. Therefore, it is not clearly stated whether Coinbase is an investor in each case or not. Of course, how much Coinbase earns with this non-transparent business practice is unknown.
This undisclosed information regarding Coinbase’s interests in the listed tokens represents a potential conflict of interest. Coinbase’s Nasdaq-listed shares have lost more than 50% since listing in April 2021.
There are already numerous critical comments about this Coinbase business practice. Financial Times speculates whether the U.S. Securities Exchange Commission (SEC) may have a closer look into Coinbase.