Coinbase CEO Brian Armstrong has responded to criticisms about betraying the values of Bitcoin and crypto more broadly with its recent acquisition of Neutrino.
Those Neutrino team members who previously worked at Hacking Team will “transition out of Coinbase,” the chief executive said late Monday. Hacking Team, one may recall, was a pioneer in selling hacking tools exploited by authoritarian governments to crack down on journalists and dissidents instead of criminals.
Congrats to Coinbase on the acquisition of chain analysis startup Neutrino!
FYI, the CEO, Giancarlo Russo, was ex-COO of HackingTeam (https://t.co/qyQ6mLU8XE), who sold "offensive intrusion and surveillance capabilities to governments, law enforcement agencies and corporations." pic.twitter.com/VVza5AjIYa
— Arjun Balaji (@arjunblj) February 19, 2019
Reiterating that “Neutrino had some of the best technology” among blockchain analytics providers, Armstrong explained in a blog post:
“However, we had a gap in our diligence process. While we looked hard at the technology and security of the Neutrino product, we did not properly evaluate everything from the perspective of our mission and values as a crypto company.”
“We took some time to dig into this over the past week, and together with the Neutrino team have come to an agreement: those who previously worked at Hacking Team (despite the fact they have no current affiliation with Hacking Team), will transition out of Coinbase. This was not an easy decision, but their prior work does present a conflict with our mission.”
"This was not an easy decision, but their prior work does present a conflict with our mission."
Actually, it's one of the easiest decisions imaginable.
— ⚡️Crypto Roth₿ard⚡️ (@CryptoRothbard) March 5, 2019
Bitcoin Exchange Reveals That Vendors Were Selling Client Data to 'Outside Sources'
Neutrino had been the target of criticism as a result of the fact some of its top employees were integral team members at Hacking Team, a company that built hacking tools to sell to the police and federal security organizations.
Over the weekend, Coinbase head of sales Christine Sandler said that the company had a “compelling” reason to acquire Neutrino for blockchain intelligence: Coinbase’s vendors had been selling client data to “outside sources.”
Sandler told Cheddar:
“It was really important for us to migrate away from our current providers — our current providers were actually 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.”
Give Credit to Coinbase
In seeking to acquire Neutrino, Coinbase had a just motive: to protect client data. In pursuit of that goal, the company obtained what it thought was the best tech solution, but it overshot its goal.
The new technological solution will hopefully ensure the integrity of client data, but it also brought what many perceived to be unethical baggage.
A #DeleteCoinbase movement even briefly formed on Twitter.
— BLOCKTV (@BLOCKTVnews) March 4, 2019
The company has shown, though, that it has listened to the crypto community. It could have put out a flowery, cleverly-crafted statement about how it plans to conduct a thorough investigation and still cares deeply about its mission. Instead, it took action: those who worked with Hacking Team will not be a part of Coinbase moving forward. And actions speak louder than words. Kudos, Coinbase.
“We sometimes need to make practical tradeoffs to run a modern, regulated exchange, but we did not make the right tradeoff in this specific case. We will fix it and find another way to serve our customers while complying with the law.”
Questions Linger About Just What Happened to Client Data
Coinbase’s prompt and decisive action is to be heralded, but it’s still not clear what client data was initially compromised or how long it had been compromised for before Nuetrino’s technology was added in mid-February.
— WhalePanda (@WhalePanda) March 5, 2019
Coinbase has declined to respond to CCN’s inquiries into these matters. We’ll update you as soon as the information becomes available.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.