Anger is continuing to escalate among Coinbase users after Coinbase exchange acquired a blockchain-intelligence platform called Neutrino which is linked to hacking of user data and accounts, multiple data privacy and human violations that led to crime. Under other names, the team behind the company has also worked with oppressive regime in various parts of the world with the intention of illegally tracking user data and committing crimes.
Following the acquisition announced last month, Neutrino, which has 8 employees so far, will move office to London and the company will still continue operating independently.
So far, a number of people have already deleted their Coinbase accounts completely and calling others to do the same via a hashtag #deleteCoinbase on Twitter even as the rage escalates, for several days now. While several accounts have so far been deleted with users posting evidence on Twitter, some users have complained that Coinbase is not allowing them to delete accounts.
It seems Coinbase yesterday started disabling deletion of accounts. Some users posted messages from Coinbase on disallowing closure of account with Coinbase saying it had forwarded the issues to "a specialist" and they would take 5-7 days or longer to review the issue and make a decision.
Neutrino is being seen as sort of a crypto monitoring service that will facilitate tracking of user blockchain crypto transactions thus potentially violating privacy and security of transactions, which does not sit well with many crypto users who say Coinbase is now defying crypto principles and following after the "legacy" way. Further, team behind Neutrino is associated already with several breaches in the data, privacy and internet world either as hackers working for governments and other entities with hidden motives or while working with other companies.
Coinbase said the motive of acquiring the service was not for transaction monitoring that that they will not condone such behavior, but the motive was to assist with compliance processes with authorities and a move towards "legitimizing crypto, making it safer and more accessible for everyone," and that "third-party blockchain analysis companies are requesting customer data from cryptocurrency companies that they serve." They said the technology was the best they found in the market for that purpose. The crypto exchange is one of the largest crypto exchanges with over $1.3 billion of revenue. However, that explanation hasn't convinced all.
From their website, Neutrino have two flagship products namely XFlow nSpect and XFlow nSight. The nSight can monitor, analyze and track cryptocurrency flows across multiple blockchains and since it has special features to assess the KYC/AML risk of crypto-financial assets, it is built for crypto exchanges to assist them with regulatory compliance. It can check origin of funds, verify spending behavior and flag suspicious transactions on blockchains. It has an API that can allow users to check and monitor transactions, addresses and wallets from within apps. nSpect, on the other hand was built for “criminal investigations and intelligence gathering” in blockchain transactions and is targeted at law enforcement agencies. Both of these products are cross-platform, meaning they work across multiple blockchains to track transactions.
Neutrino says that it has, for the last 3 years, built "best platforms available for the analysis, investigation and identification of illegal cryptocurrency transactions on different blockchains and within smart contracts." It said it joined Coinbase because they align with the company's mission of building "an open financial system" and that they share the same committment with Coinbase to " regulation, compliance and security in the cryptocurrency space."
However, the leaders -- CEO Giancarlo Russo, CRO Marco Valleri and CTO Alberto Ornaghi, also formerly worked as Hacking Team company, an Italian software services that brought them at the centre of conversies in the wider tech and privacy community. Valleri and Ornaghi (under the aliases NaGa and ALoR) sold man-in-the-middle attack software to the police force of Milan, Italy, in 2003, before Russo joined the company. Hacking Team also offered services to different regimes around the world such as Saudi Arabia, Morocco, Sudan, Kazakhstan, Bahrain and Turkey, among others.
The services were centered around the Remote Control System (RCS) software, whose users are able to remotely access files, record keystrokes, take photos and read emails from any infected device.
Hacking Team is associated with human rights abuses around the world, according to a report by The Intercept. Reporters Without Borders also labelled Hacking Team as one of five “Enemies of the Internet” in 2013 for its role in humanitarian abuses against journalists. RCS was used by the Ethiopian government, one of the most oppressive regimes in Africa, to spy on and interfear with Ethiopian Satellite Television and Radio, a news outlet run by Ethiopian expats.
The software was also used by Turkish government to spy on an American and was sold to the Sudanese National Intelligence and Security Service in 2012 for a whopping €960,000 (around $1,210,000 at the time) but the government barred from using it by the company in 2014. The software also played its part in the murder of journalist Jamal Khashoggi in Saudi Arabia and the assault and arrest of UAE activist Ahmed Mansoor.
Its software was also used to spy media in Morocco during the 2012 uprisings, which led to human rights abuses. Following an 2014 inquiry by a U.N. panel regarding Hacking Team's involvement with Sudan U.N. considers the software a weapon of sorts. Its software was involved in the murder of an Italian PhD student in Cairo, Egypt, after which the Italian government revoked Hacking Team’s export license in 2016. Having suffered financially due to this restriction, Neutrino was founded.