Cryptocurrency exchange Coinbase intends to sell its blockchain analytics software called Coinbase Analytics to two US government agencies.
As per the public records, the Internal Revenue Service (IRS) and the US Drug Enforcement Administration (DEA) are planning to buy the license from Coinbase. The software will provide “identity attribution” for cryptocurrency addresses both domestically and internationally, as per the documents issued in April and May, as per The Block.
Coinbase maintains that the tool only offers the agencies access to publicly-available data and not any internal or customer data. The company uses the product internally for compliance and global investigations.
Coinbase Analytics was developed with the help of Neutrino, a blockchain startup the exchange bought for $13.5 million last year. The acquisition was criticized due to Neutrino founders’ involvement in Italian spyware Hacking Team.
A month after that, Coinbase CEO Brian Armstrong said it would part ways with those associated with the Hacking Team. But then its sales chief announced Coinbase’s previous analytics partner Elliptic sold the customer data which Elliptic denied.
Coinbase’s contract with DEA involves the “period of performance” from April 3, 2020, to April 2, 2021.
“The least expensive tool on the market and has the most features for the money,” and could help Coinbase make from $10,000 to $250,000. According to the DEA contract, Coinbase Analytics,
“provides investigators with identity attribution and de-anonymities virtual currency addresses domestically and internationally. CA is known for its accuracy of attribution which includes some of the most conservative heuristics used in commercial blockchain tracing tools. This is critical in avoiding false positive during target identification.”
Meanwhile, the IRS contract states this tool can assist in tracking not just bitcoin but various types of cryptos.
Specifically mentioning Neutrino, it says the tool will allow the agency in analysing and,
“tracking crypto flows across multiple blockchains that criminals are currently using.”
“Coinbase Analytics also provides some enhanced law enforcement sensitive capabilities that are not currently found in other tools on the market.”
Its period of performance is one base year from the date of award with 12-month option.
Backlash from Crypto Community
“This is no surprise, our distrust in you is strengthened, we will make your analytics software obsolete,” tweeted Jameson Lopp, co-founder, and CTO of Casa.
Blockstream CSO said, “If there was ever an executive order to confiscate your Bitcoin, I’d wager Coinbase would be first in line to comply.”
The ‘DeleteCoinbase’ hashtag is also picking up and is gaining strength.
This, however, isn’t the first time that Coinbase is facing criticism. Back in 2018, the exchange suspended WikiLeaks’ Coinbase account which was when the #DeleteCoinbase movement started.
Already, the exchange has been having outage issues, it has been constantly going down whenever bitcoin rallies, even as small as 5% BTC moves.
Most recently Black Swan author also closed his Coinbase account after the exchange didn’t provide customer support.