The pact went into force on September 16th, and Coinbase will earn $455,000 from the government. Nevertheless, the deal may be extended for a maximum of three years in whole, with Coinbase receiving up to $1.36 million. The agreement marks Coinbase and ICE’s second collaboration, with the exchange previously securing a $30,000 deal to offer “computer forensics services” to the agency in August.
The story has sparked outrage in the cryptocurrency community, with Human Rights Foundation chief strategy officer Alex Gladstein claiming that the payment is significantly small considering the magnitude of Coinbase’s functions and the reputation harm caused by the partnership: “This isn’t very much money for Coinbase in the bigger scheme of things. It’s strange that they’d put their reputation at danger for such a little sum.”
The revelation has also reignited concerns of Coinbase’s 2019 purchase of Neutrino, a blockchain analytics company. In the year of the purchase, it was discovered that the individuals behind Neutrino had earlier worked for Hacking Team, a firm that was found to have assisted totalitarian regimes in spying on journalists.
Giancarlo Russo, Neutrino’s CEO, was the former COO of Hacking Team, and Alberto Ornaghi, the company’s CTO, worked there for over 8 years. As per the Washington Post, the Italian firm was involved in the assassination of many journalists in the Middle East between 2013 and 2018.
In March 2019, Coinbase CEO Brian Armstrong said that Neutrino employees with previous ties to the contentious company Hacking Team will be transitioning out of their new positions at the exchange. Kraken CEO Jesse Powell responded to Coinbase’s new deal with ICE by tweeting, “Much more strange is the buyout they made and adverse publicity they incurred to be able to provide this solution to the government.”
Coinbase has also signed deals with the US Secret Service, which announced the formation of a Cyber Fraud Task Force in July 2020, after its purchase of Neutrino.
The working group was tasked with investigating the use of cryptocurrency for nefarious reasons, and later that year stated that “cryptocurrency presents a worrisome new opportunities for participants and rogue regimes to avoid western sanctions and weaken traditional financial markets, thereby negatively affecting the interests of the United States and its allies.”
Like, this isn’t very much money for Coinbase in the grand scheme of things.
Strange that they would risk so much reputationally for such a relatively small sum.
— Alex Gladstein 🌋 ⚡ (@gladstein) September 18, 2021
Coinbase is presently engaged in a regulatory battle with the Securities and Exchange Commission, with the agency taking issue with the company’s proposed stablecoin lending program and threatening to sue.