Cryptocurrency is moving along fast–not only in terms of the technology, but also how the world is reacting to it. Anonymity, security, and use cases of every cryptocurrency is being intensely scrutinized since there are now some 2,000 or more cryptocurrencies out there. However it’s not only the currencies themselves, but also how they are distributed that is being analyzed. Coinbase, one of the world’s leading cryptocurrency trading platforms is now being criticized for acquiring a controversial blockchain intelligence firm—whose employees have in the past, sold and built hacking tools under the name HackingTeam and distributed them to countries with poor human rights records.
Coinbase’s Christine Sandler explained the rationale for buying the Neutrino intelligence firm.
“We are aware of the backgrounds of some of the folks that were involved in Neutrino and we are looking into that. I think the compelling reason for making the acquisition was that Neutrino really had some industry-leading, best-in-class technology. And moreover, it was important for us to migrate away from our current providers — our current providers were selling client data to outside sources. It was really compelling for us to kind of get control over that and have proprietary technology that we could leverage to keep the data safe, and to protect our clients.”
In this response, it seems like Coinbase is both admitting that they were selling client data, but also that they are trying to fix it by leveraging the power of a firm whose main objective was to harvest, use, and sell user data itself. Coinbase’s argument could be that they need to “fight fire with fire” and the only way to protect user data is to get people who are so proficient at getting it themselves. However, given that Coinbase has never up until this point said that they have been selling user data–and to this date, haven’t clarified what they meant, it’s unclear if Coinbase is still selling user data and to whom. It’s a worrying sentiment to say the least, and people aren’t happy.
Coinbase’s new partner, Neutrino has a questionable resume. We’re not too sure that they would be the first list of people to hire to protect user data, since their main objective in the past has been the complete opposite. Their list of clients is also a bit worrying to say the least. Not to mention many of the executives acquired during the buying are indeed HackingTeam veterans.
Neutrino has sold their “anti-encryption” tools to some countries that are leaders in censorship and internet control. Neutrino’s clients include the likes of Mexico, Oman, Kazakhstan, Uzbekistan, Bahrain, Ethiopia, Nigeria, Sudan, and others. With every country that supports internet censorship and control, there is always instances of governments using this power in unethical ways. It’s not surprising to learn then that there have reports that the team’s software has been deployed to spy on journalists instead of criminals.
Cryptocurrency is a rapidly improving technology, but the distribution of it often undermines the entire objective of it. Cryptocurrency exchanges are centralized themselves, and even if Bitcoin isn’t centralized–the transactions and use of the main point of access–being the exchange, is a volatile and vulnerable Achilles heel of the entire cryptocurrency industry itself.
Users who want to remain private with cryptocurrency should avoid services that may sell user data like Coinbase, and make sure to store their funds on open source wallet solutions. Of course, it’s easier said than done to buy Bitcoin and other cryptos without an exchange.
Considering these developments it may also be wise for privacy conscious crypto shoppers to avoid paying for things through merchants like Coinbase and Bitpay.
Decentralized money deserves open source merchant solutions that are not controlled by any single entity. For this reason TorGuard now uses the free and open source BTCPay server as our primary solution for accepting Bitcoin and Litecoin.
You can buy Bitcoins locally at ATM-like machines with cash, trade with others locally, and other technology developments like the Lightning network and atomic transactions hint at future ways that we can trade currencies without the need for centralized exchanges. But if user privacy is to be protected and if cryptocurrency wants to grow, exchanges like Coinbase, might have to be left in the dust.