The Immigration and Customs Enforcement (ICE) department of the U.S. Department of Homeland Security has paid Coinbase 1.36 million dollars for a license to use Coinbase Analytics to study American residents’ knowledge and transactions.
Coinbase once again goes against the grain of the opinions of privacy advocates in the crypto community that believe their partnerships with U.S. authorities go against the essence of cryptocurrencies. The U.S. crypto echange signed a deal with the Department of Homeland Security to supply them with a Coinbase Analytics license. Brian Armstrong, the CEO of Coinbase, assures privacy advocates that the product does not provide any information outside what’s publicly visible on the blockchain. According to him, it also does not make available Know Your Customer (KYC) information together with the aggregated results of Coinbase Analytics.
What is Coinbase Analytics?
Amongst other things, Coinbase Analytics connects cryptocurrency transactions to real-world entities, and is able to investigate fraudulent blockchain activity. It remains unclear as to the exact data that the ICE will make use of from Coinbase’s blockchain forensic tool. Coinbase acquired a previously external analytics company called Neutrino in 2019, as it did not wish to share data with third parties in its effort to comply with anti-money laundering laws.
Neutrino was founded by members of the spyware company called Hacking Team. The Hacking Team was involved in supplying spyware to oppressive regimes in Saudi Arabia, Sudan and Venezuela, and as a result, the acquisition was mired in controversy, forcing Coinbase to part ways with them. According to CEO Armstrong, the company had to “rebuild the team”.
Growing interest in blockchain analytics
The U.S. Drug Enforcement Administration and the Internal Revenue Service (IRS) have both been using Coinbase Analytics; the IRS from 2020. The IRS, in published documents, have indicated that the Coinbase Analytics software enables the client to track and interrogate cryptocurrency transactions on multiple blockchain networks.
In another government deal recently finalized, Coinbase licensed its forensic product to the U.S. Secret Service, as part of the agency’s consolidation of its electronic and financial crimes into a single cyber fraud task force. The deal with the U.S. Department of Homeland Security is thus the fourth collaboration with a U.S. governmental institution.