- Coinbase CEO Brian Armstrong has defended the sale of blockchain data to the US Secret Service
- Coinbase Analytics only packages publicly available data
- Monitoring of blockchain transactions is inevitable given tighter regulations
Coinbase CEO Brian Armstrong has hit back at criticism of the Coinbase Analytics service after it was revealed that the company will provide the US Secret Service with blockchain transactional evidence as part of a four-year deal. The contract, signed in May and worth $183,750 to Coinbase, has caused ire among the crypto world, but Armstrong defended the deal, saying in a Twitter thread that it was a way of them monetizing data they were legally obliged to keep anyway, and added that the deal helped Coinbase to “build relationships with law enforcement.”
Coinbase Analytics’ Secret Service Deal Ruffles Feathers
The Block reported last week that Coinbase was supplying blockchain analytics services to the Secret Service having eyed the prospect earlier in the year, which many in the community weren’t happy with:
— LotusMystic (@PlutusCrypto) July 11, 2020
Don.t buy #Bitcoin at #Coinbase
— d635nk 👽 (@d635nk) July 11, 2020
Following the outcry, Armstrong took to Twitter to defend the actions of the company, stating that blockchain analytics was “nothing new” and that it simply used publicly available data which it packaged and sold, just like other such enterprises.
Coinbase famously started this process by acquiring Neutrino in March 2019 which turned out to be a PR disaster after the questions were raised over the past activities of the Neutrino CEO. Armstrong acknowledged this debacle, saying that it “did not go very well honestly”, adding that after restructuring Neutrino, Coinbase wanted to start recouping the costs associated with the necessity of retaining the transactional data as required by AML laws.
Blockchain Tracking is a Necessary Evil
Armstrong then summed up his argument that Coinbase Analytics is doing nothing untoward by reminding users that anyone can do what they are doing:
Whether Coinbase sells blockchain analytics software or not, transactions on public blockchains are still traceable by any number of people out there.
— Brian Armstrong (@brian_armstrong) July 12, 2020
Interestingly, a surprisingly large number of users agreed with Armstrong’s point, or were at least not shocked by it:
Analytics software uses public data that available on the blockchain not your private data as a Coinbase customer. This is the nature of the blockchain. Anyone has access to data on chain. Coinbase developed this software to identify bad actors. Why would they not profit from it.
— ADPOY (@ADPOY1) July 11, 2020
They all are doing this.
— – (@A808YMOUS) July 11, 2020
— CryptoTrader2.0 (@CryptoN00B4) July 11, 2020
Whether you agree with the concept of an exchange packaging up its data and selling it to those wishing to use it to help catch its users breaking the law, the fact is that cryptocurrency is no longer the legal Wild West it used to be. There are now strict new laws to which crypto exchanges must adhere, laws that are getting tighter all the time, and there is no major exchange you can use now without your data being recorded and potentially used against you by law enforcement.
This is the way traditional markets work and have done for decades, and if we really want big money to come into the space then we have to accept that regulation like this is inevitable and, in fact, should be welcomed as an essential step in helping the space mature.