The recent Coinbase acquisition of Neutrino — a company specializing in “blockchain intelligence” — has got critics talking.
It turns out that a number of members of the newly-acquired Neutrino team once worked for Hacking Team, “an intelligence firm which sold spyware tools to government agencies worldwide” (source). These tools were reportedly used by authoritarian regimes to “target journalists and dissidents” and have “earned (Hacking Team) a label from Reporters Without Borders as a certified ‘Enemy of the Internet.’”
Clearly, this is not a good look for Coinbase, a company that touts itself as a pathway for global access to cryptocurrencies and the freedoms associated with the trade of such currencies. The company defended its decision by arguing that Neutrino offered the best technical solutions “to fully control and protect our customers’ data…” (source)
While Coinbase, according to their statements, does not officially condone or defend Hacker Team’s past actions, the purchase of the company could reasonably be construed by some as an endorsement of such policies.
The Neutrino firm is described as having “a comprehensive solution developed specifically for law enforcement agencies that supports analysis of flows from different public blockchains including Bitcoin, Ethereum, and Litecoin” (source). This brings into question the degree of privacy that Coinbase clients should expect to enjoy from their dealings with the company.
While those more heavily invested in the principles that inspired the creation and development of cryptocurrency may be appalled by such a decision, the larger, more casual retail base of Coinbase traders may not even bat an eye in response.
Historically, Coinbase has erred on the side of regulation at the expense of customer privacy (particularly when ordered by courts to do so), as was displayed when Coinbase previously provided private client transaction data and personal account information to authorities. This has previously been required of Coinbase for users who participated in transactions of greater than $20,000 USD, and included the provision of “taxpayer ID, name, birth date, address, ‘records of account activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, and the names of counterparties to the transaction,’ and ‘all periodic statements of account or invoices (or the equivalent)’” (source).
Users seeking greater privacy with their cryptocurrency sales and purchases may finally be convinced to find different avenues for their transactions, such as other exchanges, Bitcoin ATM’s, localbitcoins.com, or other peer-to-peer trading options.