San Francisco-based cryptocurrency company, Coinbase is reportedly in talks to offer both the Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) access to its new blockchain analytics tool dubbed “Coinbase Analytics.”
According to a The Block report regarding the deal, both U.S government agencies are going to use the new software as part of their respective investigative tools into cryptocurrency transactions. It offers capabilities currently not available on other applications, both agencies said.
There also appears to be a link between the Coinbase Analytics tool, and Neutrino, the blockchain intelligence firm Coinbase controversially acquired in 2019, with a section of an IRS document published in April about the latest deal reading thus:
“In addition to the Bitcoin Blockchain, Coinbase Analytics (fka Neutrino) allows for the analysis and tracking of cryptocurrency flows across multiple blockchains that criminals are currently using.”
These government agencies plan to use the new tool to boost their arsenal against criminals using cryptocurrencies. At the same time, Coinbase has sought to reassure that it won’t be sharing internal user data as part of the deal.
Could That Happen?
The possibility of such happening is delicate since Coinbase currently boasts millions of U.S customers. Bad actors will primarily not be transacting via the exchange, but a data leak could betray the personal information of many genuine users.
For one thing, Coinbase Analytics is directly linked to the rest of the company’s product ecosystem.
A closed job post on LinkedIn reveals that the Senior Product Manager for Coinbase Analytics would directly “collaborate” with Coinbase Pro, the company’s exchange business, and its digital custodian arm, Coinbase Custody. There are also links to Coinbase Consumer and the company’s payment and crypto division, all aspects of the business that directly relates to consumer data.
But Coinbase says customers can trust them not to spill.
In an email response, the company reaffirmed that data for the Coinbase Analytics software “is fully sourced from online, publicly-available data, and does not include any personally identifiable information for anyone, regardless of whether or not they use Coinbase.”
Additionally, Coinbase noted that it developed to software with technology acquired as part of its Neutrino purchase, and only “offers [the] product to financial institutions and law enforcement agencies to support compliance and investigation use cases.”
The company is expected to get anywhere between $10,000–$250,000 in license fees from the IRS deal, although the amount from the DEA is unknown.
Meanwhile, for crypto aficionados, the latest partnership between a crypto exchange and U.S government regulatory agencies represents another steep decline in the quest to promoting a financial system that is independent of government control.
Also, users will now have to ‘trust, with no way to verify’ that the company would not leak personal information for its users, even though many corporations that found themselves in such positions have failed to do so.
Written By W. Michael , Global News Correspondent, CNIR
