Coinbase Faces Backlash with Offers of Analytics to Government

Coinbase, a leading US-based crypto exchange, is seeking to offer Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term analytics services to two United States government agencies, sparking a community backlash against the exchange.

First reported by The Block on Friday, the exchange has officially initiated to ink deals with the US Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS), according to public documents published in April and May respectively.

The exchange is offering the services with Coinbase Analytics, formally known as Neutrino.

“As law enforcement techniques evolve and other Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term 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,” the IRS document noted.

“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.”

The deal, however, has not been offered to the cryptocurrency exchange yet. Also, the amount involved in the licensing process of Coinbase’s services is not disclosed. But the IRS document highlighted that the agency is looking to pay anywhere between $10,000 to $250,000 for acquiring such an analytics license.

Going against the ethos of the crypto community

The report created a massive backlash in the crypto community against the digital asset exchange and many are even exiting from the exchange.

Deleting your @coinbase account doesn’t delete your data. They own that data forever.

You should still delete your account. Just know they will still be selling your data to the US gov regardless. Hey @brian_armstrong! Why do you hate your customers so much? — Matt Odell (@matt_odell) June 6, 2020

Similar outrage was also sparked when Coinbase acquired Neutrino in early-2019 due to the connections of a few team members of the startup with the Hacking Team, a spyware used by a number of international governments and law enforcement agencies including authoritarian regimes.