Coinbase Wants To Reveal Identity Of Its Users To DEA & IRS (#GotBitcoin?)
The cryptocurrency news today show that one of the largest cryptocurrency exchanges Coinbase wants to sell its blockchain analytics services to the DEA and the IRS to identify its users. Coinbase Wants To Reveal Identity Of Its Users To DEA & IRS
Public documents emerging show that the San Francisco firm stands to make as much as $250,000 from the DEA for its “identity attribution” software.
Coinbase is getting in on the government blockchain analytics game.
The behemoth cryptocurrency exchange has initiated procurement deals with the Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) for a cryptocurrency investigations tool called “Coinbase Analytics,” according to publicly available documents. The Block first reported on the prospective deals Friday.
Coinbase Analytics has close ties with Coinbase’s entire product ecosystem, as its Senior Product Manager “collaborates” with “Coinbase Consumer, Coinbase Pro, and Coinbase Custody as well as” Coinbase’s payments and crypto division, according to an undated but now closed job posting.
In an emailed statement, Coinbase said its Analytics product does not and has never used any internal customer data.
“Coinbase Analytics data 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,” a spokesperson told CoinDesk.
Coinbase joins a crowded field of cryptocurrency analytics companies – Chainalysis, Elliptic, CipherTrace and others – vying for a piece of the federal pie. Agencies from all corners of the U.S government regularly contract with crypto intel firms, inking deals for their tracing software worth millions, and sometimes stretching years.
Apparently, Coinbase, who bought blockchain intelligence firm Neutrino in February 2019, is about to undercut the competition.
“This is the least expensive tool on the market and has the most features for the money,” read a DEA May notice so heavily redacted that those features’ specifics are unclear. But they are unique, as the IRS notice, published in April, notes Coinbase Analytics has “enhanced law enforcement sensitive capabilities that are not currently found in other tools on the market.”
Coinbase confirmed that it developed the Analytics product from Neutrino. It further stated that Analytics is available for financial institutions and law enforcement agencies alike, and is used in internal investigations.
“It’s an important tool to meet our regulatory requirements and protect our customers’ funds,” Coinbase said.
The DEA’s interest appears to stem in part from Coinbase Analytics’ pinpoint accuracy. It has “some of the most conservative heuristics used in commercial blockchain tracing tools,” a “critical” distinction in avoiding false positives, the DEA notice read.
Neither the DEA or IRS disclosed the bottom-line value of their prospective deals, which federal contract websites indicate have not been finalized yet. Both agencies seek year-long contacts with Coinbase, and the DEA deal is not more than $250,000.
The IRS has recently begun ramping up its activities in the cryptocurrency space, sending tax firms notices last month requesting proposals for auditing support.
Users Panic After Coinbase Mistakenly Sends 2FA Reset Notices To Customers
Coinbase sent an email to 125,000 users mistakenly notifying them that their two-factor authentication settings had been changed.
Customers of leading United States crypto exchange Coinbase have spent the weekend panicking after the exchange mistakenly sent emails to users stating that their two-factor authentication (2FA) settings had been changed.
On Friday, Coinbase accidentally sent the email to 125,000 of its customers, resulting in widespread public backlash.
Coinbase took to Twitter on Sunday to apologize for the mishap, stating, “We’re laser-focused on building trust and security into the crypto community so that the open financial system we all want is a reality. We recognize that issues like this can hurt that trust.”
I got the reply and panicked someone accessed my account or made withdrawals. Immediately logged in and reset my password after verifying nothing happened.
— AJ ⚾️l (@AgedMcNugget) August 29, 2021
Despite Coinbase’s apology, many of its users reported taking significant measures in response to the email while fearing that their accounts were being targeted by hackers, including overhauling security settings and liquidating their crypto holdings.
Comments on the exchange’s social media also suggest that numerous customers were unable to access the Coinbase app for several days after the incident.
Same here. the app still says “we’re having connection issues” while other Coinbase users I know, who didn’t get the SMS yesterday, can still log in.
— Dr. Andrevius Barnaby II (@AndreviusB) August 28, 2021
“We will continue to work to gain back the trust of every one of our customers who was impacted by those notifications,” Coinbase added.
The firm also announced it is reimbursing users with $100 worth of Bitcoin (BTC).
The exchange posted its apology in the r/Coinbase subreddit on Monday to mixed reactions from customers.
Redditor u/CoCraic_PNW claimed they were yet to receive the promised $100 credit despite having received the 2FA message on both Coinbase and Coinbase Pro, pledging to move their business to another exchange in light of the incident.
Additionally, u/Film2021 also stated that they were yet to receive the $100 BTC worth of credit and are currently looking to migrate their funds from Coinbase to a rival exchange.
However, not everyone is wielding their pitchforks at Coinbase, with Redditor u/Leagance praising the firm for promptly offering compensation for its error:
“Just got my $100. Thanks Coinbase. Regardless of the situation it was nice to know how quickly and easily I was able to lockdown my account if there was some sort of 2FA change.”
The incident comes just days after it was reported that thousands of disgruntled customers claimed their Coinbase accounts were hacked and emptied.
According to a CNBC story published on Aug. 24, thousands of users assert that Coinbase’s support has failed to respond to requests for help relating to the alleged incident.
“Interviews with Coinbase customers around the country and a review of thousands of complaints reveal a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from Coinbase that made those users feel left hanging and angry,” CNBC wrote.
Earlier this month, Coinbase announced a new support phone line for customers who believe their account has been hacked.
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