Scandal Has Hit Coinbase With Recent Company Acquisition
Popular crypto exchange Coinbase has announced last week
that they are acquiring blockchain intelligence firm Neutrino. For many in the
crypto-world acquisitions such as these seem to be a regular reoccurring event.
Consumer outrage has risen when Coinbase users did their due diligence on
Neutrino & their staff.
What Is Neutrino?
Neutrino is blockchain intelligence firm that focuses on monitoring, analyzing, & tracking cryptocurrency flows. They primarily track stolen & criminal funds, investigate ransomware, and analyze darknet markets.
Where's the Scandal?
The problem with Neutrino is its staff. The team members behind Neutrino were also directly associated with a group called "Hacking Team". Hacking Team have done more than their fair share of shady deals and actions in its past. Most notably, Hacking Team have sold spyware to governments with histories of human rights abuses, such as Saudi Arabia & Sudan. This allowed those less-than-friendly governments to harvest data of its citizens.
Coinbase's consumer base reacted harshly to the news of the acquisition of Neutrino. Many of clients feared that Neutrino would be used to track & mine data of innocent users. The hashtag #DeleteCoinbase began trending on Twitter as result of the news.
It is currently unknown how many users have deleted their account in protest.
Coinbase Strikes Back
In a statement sent to The Block, Coinbase states that it is "aware that Neutrino's co-founders previously worked at Hacking Team, which we reviewed as part of our security, technical, and hiring diligence," adding that "Coinbase does not condone nor will it defend the actions of Hacking Team," but "it was important for Coinbase to bring this function in-house to fully control and protect our customers' data and Neutrino's technology was the best we encountered in the space to achieve this goal."
Coinbase mentioned that "significant effort is required to understand the flow of cryptocurrencies and manage risks across public blockchains" and that "we are proud of our long track record balancing a compliant, regulated cryptocurrency exchange with the commitment to protecting our customers' right to privacy."
The firm concludes that "for Coinbase to meaningfully grow the cryptoeconomy, we know we can never take the trust our customers place in us for granted."
What Lays Ahead
While the purchase of Neutrino has tarnished Coinbase's image short-term, it is unlikely that it will do lasting damage to the brand. Seeing that it is one of the most popular exchanges in the United States, it will most likely maintain its position, unless more scandals come forth.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado