Coinbase admits that third-party partner sold client data

Coinbase, digital currency exchange giants, lately attracted plenty of social media flak for acquiring Italian blockchain analytics startup, Neutrino. Neutrino’s co-founders Giancarlo Russo, Marco Valleri, and Alberto Ornaghi were directly related to “Hacking Team,” a company whose spyware has been used by many international governments and law enforcement agencies.

Coinbase’s Director of Institutional Sales, Christine Sandler, disclosed in an interview that the exchange had to acquire Neutrino since their previous third-party blockchain analysis providers were selling customer data. Sandler said:

“The compelling reason for making the acquisition was that Neutrino had some industry leading, best in class technology. 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 have proprietary technology that we could leverage to keep the data safe and protect our clients.”

Messari, a cryptocurrency media platform, points out that the Neutrino acquisition was likely made to keep blockchain analysis in-house and to make sure that Coinbase had complete control over the data providers:

“A source with knowledge of the situation explained there wasn't much of a choice for Coinbase, as almost all regulated crypto exchanges likely use one of several large blockchain analytics tools, including those from industry leaders Elliptic and Chainalysis. The source said that those firms had moved to a ‘give-get’ data model, where Coinbase would only have been permitted to use the service in return for providing its own data. Coinbase ‘brought that capability in house so they weren’t in a situation where using a 3rd party tool was making it better’ as a surveillance tech.”