Coinbase users pull out over $200M in digital currency over privacy concerns

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Shortly after Coinbase (NASDAQ: COIN) offered to license its analytics platform to the Internal Revenue Service (IRS) and the Drug Enforcement Administration (DEA), Coinbase users removed over $200 million worth of BTC from the U.S.-based digital currency exchange.

https://twitter.com/matt_odell/status/1270470298337529856

Coinbase users are upset

Although Coinbase claims that it will only be providing the IRS and DEA with “streamlined access to publicly-available data and at no point do they have access to any Coinbase internal or customer data,” Coinbase users feel like their privacy is being violated or might be violated if the deal with the federal agencies push through.

https://twitter.com/Josh_Rager/status/1269040762483867650

Since Coinbase announced its offer to the DEA and IRS, more than 22,500 BTC has been withdrawn or sent to a different wallet. The platform’s government offer has caused many of its long-time customers to remove their funds, stop using the exchange, and publicly denounce Coinbase with the hashtag #BoycottCoinbase. 

#FuckCoinbase #BoycottCoinbase https://t.co/Koymj3XNdv

— privex.social/@cadawg (@_CADawg) June 6, 2020

Some individuals, like Twitter user @_CADawg, say Coinbase is trying to be like Google by profiting off of their customers’ data; _CADawg goes on to say that they deleted their Coinbase account.

Yup. Nope. I’m all set. #BoycottCoinbase …. nothing but excuses and spy software. They want In bed with DEA, and IRS. Nothing could possssibly go wrong. Already bad enough google and Apple know your every move and sell for profit, now Alphabet boys want more and easier access. https://t.co/pMXlMrbtDc

— 🇬🇧💸XRP_NiS💸🏴󠁧󠁢󠁳󠁣󠁴󠁿 (@XRP_NiS) June 6, 2020

Others, like Twitter user XRP_NiS, are saying that Coinbase’s offer to the IRS and DEA shows that Coinbase is simply spyware, tracking their customers every move similar to what Google and Apple do via the internet and our cellphones.

The straw that broke the camel’s back

Coinbase’s offer to the IRS and DEA was the straw that broke the Camel’s back; however, Coinbase users were increasingly becoming frustrated with the digital currency exchange before Coinbase made the government an offer. During periods when digital assets saw large price swings in a matter of seconds and minutes, the Coinbase platform would often crash, and be unusable. This affected users who may have been looking to buy or sell their digital currency during the price swings in a negative way.

Coinbase recently experienced outages on 4/29 and 5/9. While we were able to quickly restore service in both instances, here is a deeper look at what went wrong, how we fixed it, and how we’re improving our processes to better serve our customers. https://t.co/JC0NDtw432

— Coinbase 🛡️ (@coinbase) May 14, 2020

This deeply upset Coinbase users and was one of the first instances that caused Coinbase users to look for a better digital currency exchange, one that does not crash during periods of high volatility and volume. But now that Coinbase has offered to work with the government, which means they may potentially reveal their customers’ personal identification information, Coinbase is experiencing an even larger exodus of users.