Is the Coinbase effect giving the exchange an unfair advantage

ambcrypto.com:

We know that the “Coinbase Effect” has turned into an industry-wide phenomenon. This is because any token’s listing by the exchange is known to give a positive push to its value. 

However, a recent report by the Financial Times suggests that Coinbase is profiting from its listing. For instance, last month, crypto-startup Decentralized Social issued its token DESO which later got listed on Coinbase. Soon after, the token’s value skyrocketed by 100%, benefiting the venture. 

FT reported that Coinbase’s venture arm was in fact a Venture capital (VC) firm backing Decentralized Social. While it raises questions about major conflicts of interest, DESO is only one of the at least 20 such listings by Coinbase as per the report. 

Here, it is also worth noting that Jack Dorsey, former chief of Twitter, had dismissed Web3 as a VC playing field in the past. 

The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.

Know what you’re getting into…

— jack⚡️ (@jack) December 21, 2021

In this regard, crypto-analyst Faisal Khan also explained how VCs are selling crypto to retail investors. He said, 

“If coins, especially VC-backed coins, consistently underperformed Bitcoin/Ethereum after listing on Coinbase, that says to me that insiders were waiting for a big, dollar-based exchange to list so they could sell – VCs taking profits at the expense of retail.”

Additionally, FT’s analysis found that it’s not Coinbase as a whole alone that has been benefiting from its token listings. Andreessen Horowitz and other leading venture capitalists who are also part of Coinbase’s board are also beneficiaries.

Soon after the report,