Coinbase Faces Backlash As Bitcoin Users Delete Accounts Following Controversial Acquisition
The U.S. cryptocurrency exchange Coinbase acquired blockchain analytics firm Neutrino on February 19 this year, a move that immediately drew the ire of many within the crypto community.
The controversy surrounding the acquisition has morphed into a Twitter battle under the #DeleteCoinbase call. In short, bitcoin users are reportedly closing their Coinbase accounts in protest to the controversial acquisition.
The anger being directed at the cryptocurrency exchange has its roots in Neutrino’s links to the startup Hacking Team.
Italy-based Neutrino’s C-suite team– the CEO Giancarlo Russo, CTO Alberto Ornaghi, and Chief Research Officer Marco Valleri – all worked at the Hacking Team project, a company accused of selling spyware to a number of countries and governments well known for their poor human rights record.
The publication of a story in Washington Post about the links Hacking Team had with the Saudi Arabian government has upset even more within the bitcoin community.
The spyware that Russo and co sold to the Saudi enforcement group was allegedly used to ensnare dissident journalist Jamal Khashoggi- who operatives murdered in the Saudi consulate in Istanbul.
Hacking Team’s spyware, which the startup described as “offensive technology” and a “hacking suite for governmental interception,” is alleged to have been used against journalists in several countries, including in Ethiopia, the United Arab Emirates (UAE), and Morocco.
Although several users have called the acquisition a deal-breaker and have shared screenshots of their deleted accounts, the exact extent of the backlash isn’t that clear.
A search on Google for the hashtag #deletecoinbase returns over 500 results, though that pales in comparison to Coinbase’s 13 million user accounts.
Among those to state, their disappointment is the chief strategy officer at Coinshares Meltem Demirors, who questioned Coinbase’s decision to acquire a firm with such reputational risks.
According to her, the ethical issue surrounding the founders of Neutrino clashes with the kind of image Coinbase has been trying to promote, especially that of an institution that wants to create an open and “more inclusive financial system.”
In 2013, Reporters without Borders named Hacking Team among the five companies that were “Enemies of the Internet,” ostensibly referring to the group’s links with governments that tracked down, harassed and even killed critics.
And in 2017, a statement from the Ministry of Economic Development in Italy said that Hacking Team posed risks to human rights in foreign countries due to the startup’s export of surveillance technologies.
In the wake of the controversial acquisition, crypto writer Kyle Torpey wrote to Coinbase seeking some answers to the questions being asked within the bitcoin community. He tweeted that though the exchange failed to give a comprehensive response to his concerns, they did send him a statement.
Part of the statement reads:
“We are aware that Neutrino’s co-founders previously worked at Hacking Team, which we reviewed as part of our security, technical, and hiring diligence.”
Coinbase states that it doesn’t “condone nor will it defend the actions of Hacking Team,” but that the significance of Neutrino’s technology outweighed the team’s past behavior.
According to Coinbase, using the analytics firm’s technology would see it expand its listings, but more importantly, protect its users’ data using an in-house product.
Exactly how the controversy and subsequent protest affect Coinbase’s user numbers will only become apparent in due course. As for now, the platform remains one of the most convenient for entry-level crypto users.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.