It’s safe to say that a key roadblock to greater adoption
for blockchain technologies in 2019 and beyond is getting rid of the bad actors,
the ICO hit-and-run merchants and the scam artists. So naturally, one of the
most influential platforms has ended up hiring employees who previously worked
for a company which sold spyware to various nation states and governments.
Coinbase acquired Neutrino, a provider of blockchain
analytics solutions, last month. At the time Varun Srinivasan, director of
engineering at Coinbase, summarised the acquisition’s plan. “By analysing data
on public blockchains, Neutrino will help us prevent theft of funds from people’s
accounts, investigate ransomware attacks, and identify bad actors,” Srinivasan
wrote in a blog post.
“Neutrino’s technology is the best we’ve encountered in this
space, and it will play an important role in legitimising crypto, making it
safer and more accessible for people all over the world.”
Yet furore raged over Neutrino employees who had previously
been affiliated with Hacking Team, a Milan-based provider of remote monitoring
implants – in other words, spyware – sold exclusively to government agencies
worldwide, as a
Citizen Lab report from 2014 puts it.
Coinbase had released statements to the effect that it was
looking into the allegations, but in a
further blog post dated March 5, Brian Armstrong, Coinbase CEO and
co-founder, confirmed those at Neutrino who previously worked at Hacking Team –
stressing there is no affiliation with them now – will be ‘transitioned out’ of
“We had a gap in our diligence process,” Armstrong wrote. “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.
“Bitcoin – and crypto more generally – is about the rights
of the individual and about the technological protection of civil liberties,”
Armstrong added. “Coinbase seeks to be the most secure, trusted, and legally
compliant bridge to cryptocurrency. We sometimes need to make practical trade-offs
to run a modern, regulated exchange, but we did not make the right trade-off in
this specific case.”
More eyebrows were raised when it came to the detail of
Coinbase originally acquiring Neutrino. Speaking
to Cheddar last week, Christine Sandler, Coinbase head of sales, noted how
the company’s previous blockchain analysis providers were selling customer
“The compelling reason for making the acquisition was that Neutrino
had some really industry leading and best-in-class technology,” said Sandler,
adding: “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.”
You can read the full blog post from Armstrong here.
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