While trying to explain themselves, major crypto company Coinbase has prompted another wave of anger by revealing previously undisclosed information that reportedly might be relevant to clients of some other providers of crypto related services, also.
After a controversial acquisition of intelligence and analytics agency Neutrino, and #DeleteCoinbase movement on Twitter, the story got a brand new twist. It turns out that the acquisition of Neutrino was motivated by the behavior of their third-party providers as they were selling Coinbase customers data to external sources.
In an interview with Cheddar, Christine Sandler, the Director of Institutional Sales at Coinbase, has revealed the main reason behind the controversial acquisition. “It was important for us to migrate away from our current providers,” Sandler said. “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.”
Ryan Selkis, the founder of Messari research, shed some light on the context of the situation. According to him, it is likely that Coinbase did not have much of a choice because all regulated crypto exchanges use blockchain analytics tools like Chainalysis or Elliptic. The firms have moved to a “give-get” data model, which forces exchanges to give up their user data for the service. With the acquisition of Neutrino, Coinbase simply brought the service in-house so that they don’t have to rely on third-party tools anymore.
Meanwhile, Jesse Powell, CEO of major cryptocurrency exchange Kraken, added that “blockchain analysis is not a strict requirement but, at this point, a regulator would be suspicious if there’s none at all.”
In either case, the current acquisition of Neutrino does not help the situation either. The customer intelligence and analytics agency is closely related to the ill-famed Hacking Team, which is known for selling spyware to governments with shady human rights records, including Ethiopia, Saudi Arabia, and Sudan.
Hence, it seems that the alarming statement had thrown even more fuel into the fire surrounding Coinbase. For instance, Riccardo Spagni of Monero (XMR) has struggled to make sense of the situation.
Wow. I’m really struggling to view Coinbase’s actions in anything but the harshest light.
1. Deal with blockchain tracing firm
2. Discover that firm selling client data
3. Don’t disclose this to anyone
4. Buy a firm that is made up of human rights violators
5. Profit?!?Janine@J9RoemReplying to @J9Roem
Director of Institutional Sales at Coinbase praising Neutrino’s “best-in-class technology” and saying that they needed to migrate to another “provider” because their previous one was “selling client data to outside sources.” (1:25)
h/t @BTCismoney https://cheddar.com/media/coinbase-adds-support-for-ripple-s-xrp-despite-regulatory-uncertainty …
revelation from @Coinbase.
– Was customer privacy breached? (or only aggregate data)
– How long have you known?
– Did previous tracking providers break contract? (why no lawsuit yet)
– How is this an argument explaining acqui-hire of unethical people?https://cheddar.com/media/coinbase-adds-support-for-ripple-s-xrp-despite-regulatory-uncertainty.amp?__twitter_impression=true … pic.twitter.com/JLXGh9YlW4
WOW, did not know this in the AM when i did my video.
Thank god I knew to stay clear of your company when I joined this space & advised as such to anyone that was willing to listen.Udi Wertheimer@udiWertheimer
YOU DID WHAT?!?!
A @coinbase official responds to #DeleteCoinbase by saying they had to acquire Neutrino because their previous tracking provider SOLD COINBASE CUSTOMER DATA TO THIRD PARTIES
And that’s why we should trust the people you choose to do business with?!?! https://twitter.com/j9roem/status/1102161829252526081 …
Meanwhile, CEO of Kraken has also shared findings of the Kraken’s Compliance team about Neutrino:
“Neutrino came in last place on product (out of the 5) but was disqualified anyway due to the risks. However, other factors are important in M&A: cost, culture fit,” Powell tweeted.
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