Follow cryptocurrency news with regularity? You probably noticed the #DeleteCoinbase campaign taking place on Twitter. A portion of Coinbase users (former users, now, presumably) were deeply unhappy about the massive crypto exchange purchasing Italian software developer, Neutrino.
But if Neutrino is just a software developer, and Coinbase is just a crypto exchange, why is there such anger at the acquisition? Why are angry users flooding Twitter with messages about deleting Coinbase accounts as a moral stand?
Here’s what you need to know about #DeleteCoinbase.
Coinbase Acquired Neutrino
On 15 February 2019, Coinbase spent $13.5 million to acquire software developers, Neutrino. Neutrino develops analytics solutions designed to track and monitor whole blockchain ecosystems. For instance, to track stolen funds and criminal activity, to investigate ransomware usage, and to analyze darknet markets.
The reasons for the acquisition vary. In an interview with Cheddar, Coinbase’s Director of Institutional Sales, Christine Sadler, says that “It was important for us to migrate away from our current providers. They were selling client data to outside sources, and it was compelling for us to get control over that and proprietary technology that we could leverage to keep the data safe and protect our clients.”
Strong claims against blockchain analytics company, Elliptic. (A claim which also looks dubious, with Elliptic CEO, Dr. James Smith, releasing a public statement strongly refuting the assertions.)
Neutrino Linked to Hacking Team and #DeleteCoinbase Hit Twitter
Following the acquisition announcement, keen-eyed crypto-users quickly discovered that the Neutrino management team had led projects for the notorious Hacking Team (specifically, three executives: CEO Giancarlo Russo, CTO Alberto Ornaghi, and CRO Marco Valleri). Hacking Team has strong links to a series of oppressive governments known for human rights abuses.
The University of Toronto’s Citizen Lab has covered Hacking Team’s “Untraceable” spyware, a tool used by and sold exclusively to governments. The tool, known as RCS, has seen use against outspoken news outlets, human rights activists, and numerous journalists around the globe.
The strong links between Neutrino, Hacking Team, the RCS spyware, and its confirmed use as a political spyware tool was too much for some Coinbase users. The suggestion that a company with such strong links to spyware, data collection, and government collusion would begin working alongside one of the largest exchanges could have severe consequences for the privacy of Coinbase users.
And so, the #DeleteCoinbase movement hit crypto-Twitter.
Critics of the acquisition and potential threat to Coinbase user security strongly advised fellow crypto users to delete their Coinbase accounts. The only way to make a real stand, they reason, is to hit Coinbase where it hurts: the bottom line.
Is #DeleteCoinbase Working? Is Coinbase Listening?
Surprisingly, yes. Coinbase is listening loud and clear. Well, listening. #DeleteCoinbase was shared thousands of times. Angry Coinbase users began posting images of them clearing their Coinbase account of funds, then deleting the account. More followed. Users posted tutorials of how to delete a Coinbase account, while others posted images of Coinbase refusing to completely remove the account at the current time.
— Owen Keys 🔑 (@OwenKeys) March 1, 2019
The momentum of #DeleteCoinbase was enough for Coinbase CEO, Brian Armstrong, to announce that “Those who previously worked at Hacking Team (despite the fact that they have no current affiliation with Hacking Team), will transition out of Coinbase.”
Armstrong also acknowledged that “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.”
A big win? Not entirely.
— DelanoID (@DelanoDID) March 6, 2019
Ongoing #DeleteCoinbase Issues
Since Coinbase acquired Neutrino, and the #DeleteCoinbase movement gathered pace, at least two cryptocurrency exchanges have announced that they refused to work with Neutrino. Why? For the exact reasons critics of the acquisition are laying out.
First up, Jesse Powell, CEO of Kraken, released a Tweet disclosing their compliance process. The Tweet (check it out below) gives a detailed explanation as to why Kraken discounted Neutrino from their blockchain analysis tools onboarding.
I asked our Compliance team what they thought of Neutrino. Fortunately, they'd just completed an evaluation. Neutrino came in last place on product (out of the 5) but was disqualified anyway due to the risks. However, other factors are important in M&A: cost, culture fit. pic.twitter.com/kiYh11GEBc
— Jesse Powell (@jespow) March 3, 2019
BHB Network head Giacomo Zucco told Bitcoin Magazine that his company had also turned down Neutrino, for similar reasons to Kraken’s analysis.
It isn’t only other competing exchanges taking a swipe at Coinbase’s decision to acquire and work with Neutrino.
— Janine (@J9Roem) March 3, 2019
Janine, as in the above Tweet, details how Coinbase may have broken their Terms of Service and Privacy Police by allowing the sale of private data to third-parties. Another breach of trust from Coinbase, all adding up to a rather lousy month.
What’s Next for Coinbase?
Is Coinbase skating on thin ice? Or will #DeleteCoinbase fizzle out just as quickly as it erupted? It is hard to tell. Critics holding the Coinbase debacle up alongside the #DeleteFacebook movement are probably a little wide of the mark. The right intention, but Coinbase has nowhere near the societal pull or record of privacy violations as the social media behemoth.
What is interesting is how clearly Coinbase is marking out their future as not only a major exchange but as a crypto-magnate.
Since its foundation, Coinbase has acquired 15 companies across a variety of cryptocurrency industries. For instance, it bought securities dealer Keystone Capital, decentralized exchange, Paradex, digital identity and privacy startup, Distributed Systems, and Earn.com, a startup that allows you to earn money for completing your regular online tasks (like reading and responding to email). That’s without including the numerous investments Coinbase’s venture arm, Coinbase Ventures is making, too.
Despite the backlash against Coinbase, this is a dent in the crypto armor rather than a fatal blow. Are you joining the #DeleteCoinbase movement? Check out XCH4NGE for a new peer-to-peer exchange with big potential!
We earn commission if you purchase items using an affiliate link. We only recommend products we trust. See our affiliate disclosure.