New government documents revealed that Coinbase (NASDAQ: COIN) has offered to license out its analytics platform, Coinbase Analytics, to the U.S. Internal Revenue Service (IRS) and the Drug Enforcement Administration (DEA). According to reports, Coinbase Analytics would provide both government agencies with a tool that would help them in their internal investigations.
Coinbase is claiming that Coinbase Analytics only provides its users with “streamlined access to publicly-available data and at no point do they have access to any Coinbase internal or customer data.” But there is no reason to believe that Coinbase won’t help government agencies pinpoint their own users if they are involved in an investigation.
The two federal agencies have reportedly expressed interest in Coinbase’s offer. The DEA’s document states, “The U.S. Department of Justice, Drug Enforcement Administration (DEA), intends to award a sole source Purchase for software licenses for Coinbase supplies pursuant to FAR 13.302, Purchase Orders,” indicating there is a strong chance they will accept Coinbase’s offer.
Coinbase launched its analytics platform after it acquired the blockchain analytics platform Neutrino in February 2019.
Acquiring Neutrino was controversial because a few members of the Neutrino team were allegedly part of Hacking Team, a surveillance software company with a history of selling their software to government agencies in Ethiopia, Bahrain, Egypt, Kazakhstan, Morocco, Russia, Saudi Arabia, Sudan, Azerbaijan, and Turkey.
Following the negative feedback, Coinbase made an announcement saying they would transition the alleged team members that worked for Hacking Team—Neutrino CEO Giancarlo Russo, CTO Alberto Ornaghi, and Chief Research Officer Marco Valleri—out of the company.
Coinbase is considered to be the largest digital currency exchange and wallet provider in the United States. In August 2019, the number of people using Coinbase crossed the 30 million mark. Being the largest digital currency exchange in America means that you have the most data and information on digital currency users in America.
Although the company says Coinbase Analytics aggregates and streamlines blockchain data from public sources, nothing is stopping Coinbase from offering up their user’s personal identification information if a Coinbase user happens to be part of an IRS or DEA investigation.
Shortly after Coinbase’s government offer was made public, millions of dollars began to leave the platform. Josh Rager, the co-founder of blockchain and digital currency education platform BlockRoots, says that Coinbase customers are taking their business elsewhere because the pending deal with the IRS and DEA has created a distrust between consumers and Coinbase.
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