In a revelation that is sure to not help the cause for the popularity of Coinbase, executive Christine Sandler attempted to explain the reasoning behind the controversial acquisition of Neutrino, a team specializing in blockchain-tracking. The team behind Neutrino included members who had previously sold surveillance software to governments in countries with questionable human rights records.
In an effort to justify the acquisition of Neutrino, Sandler admitted that the company’s previous tracking provider had been selling client data, stating,
It was important for us to migrate away from our current providers… They were selling client data to outside sources and it was compelling for us to get control over that and have proprietary technology that we could leverage to keep the data safe and protect our clients.(source)
While this explanation may offer further reasoning for the purchase of Neutrino, the admission of a compromise of private user data is causing an increasing swirl of angry demands in the community to #deletecoinbase.
What exactly was sold by the previous provider is yet to be determined, but considering that all clients must comply with detailed KYC (know-your-client) identification procedures to exchange on Coinbase, the information breach could be highly concerning to users. Coinbase has also been known to track all details regarding the buying and selling behaviour of clients, as it is required to do so in order to ensure tax compliance.
As feared by many, the processes involved in KYC / AML that are due upon signing up, along with the analysis of trading on exchanges such as Coinbase, are fraught with issues of trust, security, asset custody, and privacy.