on the crypto
One of the giants of cryptocurrency exchanges has entered into a collaboration agreement with the Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) for a cryptocurrency investigation tool called "Coinbase Analytics", according to some documents available to the public.
Coinbase working with the United States government, but customer private data is safe
Coinbase Analytics has close ties to Coinbase's entire product ecosystem, as its Senior Product Manager "collaborates" with "Coinbase Consumer, Coinbase Pro and Coinbase Custody", as well as the Coinbase payment section and the cryptocurrency division, according to a recent job announcement now closed.
In a media statement, Coinbase stated that its Analytics product does not use and has never used internal customer data. "Coinbase Analytics data comes completely from online and publicly available data and does not include any personally identifiable information for anyone, regardless of whether they use Coinbase or not," said a spokesman.
Competition exceeded on the price
Coinbase joins an already large group of cryptocurrency analysis companies - Chainalysis, Bitcoin Pro, Elliptic, CipherTrace and others - fighting each other to earn a piece of the Fed's pie.
Agencies from all over the United States government regularly enter into multi-million dollar contracts with cryptographic companies, particularly contracts that cover their tracking software that sometimes last for years.
Apparently, Coinbase, which bought the blockchain intelligence firm Neutrino in February 2019, is about to dismantle the competition. "This is the least expensive tool on the market and has the most money features," reads a May DEA note, although the specifications for those features are unclear.
But they are unique, as the IRS notes in an April publication in which it notes that Coinbase Analytics has "enhanced the sensitive capabilities of law enforcement that are not currently found in other tools on the market".
The contract is not yet finalized
Coinbase has confirmed that it has developed the Neutrino Analytics product. He also said that Analytics is available for both financial institutions and law enforcement agencies and is used in internal investigations.
"It's an important tool to meet our regulatory requirements and protect our clients' funds," said Coinbase. The interest of the DEA seems to derive in part from the precise precision of Coinbase Analytics.
It has "some of the most conservative heuristics used in commercial blockchain tracking tools", a "crucial" distinction to avoid false positives, reads the warning from the DEA. Neither the DEA nor the IRS have disclosed the economic value of their potential operations, and the websites that publish the federal contracts indicate that they have not yet been finalized.
Both agencies seek annual partnerships with Coinbase and the DEA deal does not exceed $ 250.000. The IRS recently started to intensify its activities in the cryptocurrency space, sending requests to tax companies last month for proposals for auditing support.
