San Francisco-based cryptocurrency exchange Coinbase is selling its blockchain analytics software to the U.S. Secret Service, a part of the U.S. Department of Homeland Security, as per the official public records. The contract was first spotted by TheBlock.
The U.S. Secret Service is a federal agency that investigates financial crimes.
The contract was awarded by the U.S. Department of Homeland Security (DHS) for four years. Signed on May 9, 2020, the contract, which is worth $183,750, will end on May 11, 2024.
Last month, as we reported, Coinbase was looking to sell its analytics software to two other U.S. government agencies — the DEA and the Internal Revenue Service (IRS). But they haven't contracted any rewards, and these contracts are now “inactive.”
Well, it Helps Build Relationships with Law Enforcement.
Coinbase Analytics, previously known as Neutrino, an intelligence agency acquired by Coinbase in 2019, has been the center of controversy for its involvement in the Italian spyware firm Hacking Team.
After the latest news of Coinbase selling its software became public, its co-founder and CEO Brian Armstrong took to Twitter to share that the reason behind the acquisition was “we don't like sharing data with third parties when we can avoid it.”
He also shared how the acquisition didn't go very well, and since then, they have parted ways with some of the company's team members to rebuild it in-house that helped the company “recoup costs.”
This software helps Coinbase “build relationships with law enforcement, which is important for the industry, especially if you want more fiat in the world to flow into crypto over time,” Armstrong said.
He echoed the company's comments about the software compiling just “publicly available data” and “organizing it to make it more useful.”
And if you Want Privacy, use Privacy Coins
According to Coinbase CEO, privacy coins, which he is a fan of, are there “if people want true privacy.”
Coinbase is about maintaining “relationships with both the traditional financial world and the new crypto world.” This bridge is the “only way we're going to get to a truly crypto-to-crypto economy which can have all sorts of new improvements (including better financial privacy),” said Armstrong.
Is there gov demand? Obviously. We have our internal tools that we use but productizing those tools and selling them, driving competition and accelerating development in the anti-privacy space is at odds with our values. How could one resist using client data to gain an edge?
— Jesse Powell (@jespow) July 12, 2020
But the crypto community remains wary of the exchange, and Armstrong's explanation didn't help bring their anger down.
However, Jake Chervinsky, General Counsel at Compound Finance, argues that there is no point in wanting financial privacy from public blockchains because analytics services are here to stay.
“Don't expect the Constitution or the courts to protect your privacy either: the prevailing view is that there's no right to privacy in bitcoin transactions under the 4th Amendment (for now). The only person responsible for protecting your privacy is you,” he said.
