On June 6th, the news of Coinbase selling its users’ personal information to the US government hit the market like a meteor. The public document states that one of the world’s biggest cryptocurrency trading platforms seeks to sell their clients’ data to the IRS (Internal Revenue Service) and DEA (Drug Enforcement Administration) for $10,000 to $250,000.
In early March, Coinbase acquired Neutrino, which is an Italian company with more than suspicious business practices. Neutrino’s executives, CRO Marco Valleri, CTO Alberto Ornaghi, and CEO Giancarlo Russo, were all a part of the Hacking Team. There is another fact we find noteworthy. Hacking Team is a software provider for governments often violating human rights and personal privacy around the world.
Neutrino, on the other hand, is a company that is well-known for (in their own words) “analysis, investigation, and identification” of individuals using the blockchain technology. In simpler terms, the firm is specialized in revealing the identities of crypto users. Up until this point, it was dubious why Coinbase would acquire a company like that. However, with the latest leak, it became more than obvious.
Coinbase Seeks to Sell Your Data to the Government
According to the latest revelations, the biggest North American crypto exchange is actively seeking to collaborate with the US government. This wouldn’t be odd if their intentions are to be as compliant as possible. However, this is not the case. Coinbase is, in fact, looking to sell their user’s personal information acquired through Neutrino (now Coinbase Analytics) to the two mentioned US government agencies.
Naturally, as it is always the case in such scenarios, the IRS had an explanation ready for the issue:
As law enforcement techniques evolve and other cryptocurrencies gain acceptance, criminals are using other types of cryptocurrencies, not just Bitcoin to facilitate their crimes. In addition to the Bitcoin Blockchain, Coinbase Analytics (fka Neutrino) allows for the analysis and tracking of cryptocurrency flows across multiple blockchains that criminals are currently using. Coinbase Analytics also provides some enhanced law enforcement sensitive capabilities that are not currently found in other tools on the market. This action will result in a Firm Fix Priced purchase order, Period of Performance: One base year from date of award with one 12-month option.”
When we read this comment, we have to ask ourselves the following question. Doesn’t the government have to have some kind of personal information available to be able to catch criminals?
Coinbase Swears to be Loyal to Their Clients
Yet, Coinbase’s spokesperson is offering reassurance that this is not the case. Let’s quote the source directly:
Coinbase Analytics data is fully sourced from online, publicly available data, and does not include any personally identifiable information for anyone, regardless of whether or not they use Coinbase. Coinbase Analytics is a blockchain analytics product that we use internally for compliance and global investigations. It’s an important tool to meet our regulatory requirements and protect our customers’ funds.
We developed Coinbase Analytics with technology from the Neutrino acquisition. Coinbase also offers this product to financial institutions and law enforcement agencies to support compliance and investigation use cases. This tool only offers them streamlined access to publicly-available data and at no point do they have access to any Coinbase internal or customer data.
Since the US government is yet to provide a more thorough explanation, we still have to wonder what are they going to do with that “cryptocurrency flow” without being able to identify the alleged lawbreakers?
They Were Not Forced Into Doing So – They Applied
As Coinbase stated, they are offering their “product” to financial institutions and law enforcement agencies. The word “offer” means that the company wasn’t forced into submission by the legal apparatus of the government. On the contrary, they approached the US government with the proposition which became active on April 28th.
Let’s look at things from the perspective of somebody who is a strong supporter of decentralization. Coinbase is obviously ready to provide all the info to two centralized entities. Knowing the size of Coinbase, does crypto have the chance to remain decentralized?
Sadly, the community basically gave up decentralization once the majority of cryptocurrency users decided to place their trust with centralized exchanges. One such is Coinbase. However, now, Coinbase went a step further in betraying the basic postulate of crypto. Moreover, this move is everything we need to answer the question CoinSyncom raised on May 10th.
Coinbase Gets Away With Anything
In the article published almost a month ago, we dissected the problem of Coinbase service crashing almost every time Bitcoin (BTC) is making a big move. The reasons might just be of a technical nature, which is still tragic for a company of that size. However, even if it is so, where are the market’s watchdogs when that happens three times in less than a year?
The United States of America is a country with notoriously strict financial policies. Businesses involved in investments tremble at the very thought of the SEC (Securities and Exchange Commission). Still, Coinbase denies service to its customers each time BTC shows its famous volatility without any repercussions. How is that possible?
Well, ladies and gentlemen, we might just have been handed the answer. The US government, obviously, decided to make use of the biggest North American cryptocurrency exchange. The main goal is to get the back door entrance to your personal crypto-related data.
The Biggest Possible Hypocrisy
Just to reveal Coinbase’s hypocrisy, let’s remind our readers of something that happened in February. After notifying 13,000 of its users that their information is going to the IRS, the company issued the following statement:
Coinbase fought this summons in court in an effort to protect its customers, and the industry as a whole, from unwarranted intrusions from the government. After a long process, the court issued an order that represents a partial, but still a significant victory for Coinbase and its customers: the order requires Coinbase to produce only certain limited categories of information from the accounts of approximately 13,000 customers.
Thus, the company that fought for its customers’ privacy suddenly applied to distribute all those information to government agencies? Something deeply changed in that organization in a matter of just three months. Did they throw away the basic principles of crypto and decentralization for money or is it out of their hands? Well, they were a centralized company to start with. Should you use Coinbase knowing that they are probably selling your data to the government? We’ll leave you to be the judge of that.
Let us know what you think about the latest move from Coinbase in the comment section below. We appreciate your opinion!
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