Is it time to #DeleteCoinbase? Hundreds of people may have already done so since Coinbase acquired controversial surveillance firm Neutrino. And now it has tried to justify the hire—by admitting that its former analytics providers were selling user data.
The crypto on-ramp for millions of people, Coinbase caused quite the storm by acquiring blockchain analytics company Neutrino. Neutrino is made up of former members of Hacking Team, which is accused of selling spyware to oppressive governments around the world. Hacking Team was also involved in an attack on human rights activist Ahmed Mansoor, who is now serving a ten-year prison sentence. Little wonder then that Coinbase’s customers were alarmed about the hire.
Now, to add fuel to the flames, in an interview with Cheddar, Coinbase head of sales, Christine Sandler revealed that the companies previously hired by the exchange to monitor blockchain data had been leaking customer data.
“Our current providers were actually selling client data to outside sources and it was really 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,” Sandler said.
It’s unclear which analytics providers Coinbase is referring to, the scale of the breach and how much data was involved. (Coinbase has not responded to requests for clarification). But, according to Messari, well-known analytics platforms Chainalysis and Elliptic are possible candidates as they recently adopted a “give-get” model—with “get” being the operative word.
The way it works is that, in order to use the firms’ surveillance technology, exchanges must first provide data about their customers. It’s a sort of quid pro quo where the surveillance firms can then sell this data on, regardless if the exchange is happy about it or not. The exchange’s displeasure at the practice of selling data may have been what drove it to acquire Neutrino.