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A new report has surfaced claiming that one of the biggest cryptocurrency exchanges in the industry is planning on selling user data to government agencies for $250,000. According to documents available to the public, the Drug Enforcement Agency (DEA) and the Internal Revenue Service (IRS) are looking to purchase licenses from the exchange’s analytic tool called Coinbase analytics.
The analytics tool appears to provide law enforcement agencies with analysis and tracking of cryptocurrency flows across multiple blockchains that criminals are using. Additionally, it can provide enhanced law enforcement sensitive capabilities that are not found in other tools on the market, showing a period of performance adaptable to a 12-months period. It can also provide investigators with the identity attribution, and de-anonymities of virtual currency addresses both domestically and internationally.
Coinbase denies the allegations claiming that the data provided by the analytics tool solely include public information and does not include private information. The company continues to explain that any other company could obtain the same information through a specialized tool.
Unfortunately, not many community members seem to believe in the story. Many have expressed their willingness to leave the crypto exchange if they were to find out that Coinbase was secretly selling their data. The crypto exchange also faces other issues, with people complaining about the high fees, the outages during bitcoin’s price peaks, and privacy concerns. It’s a known fact that Coinbase shared information with the IRS about clients who traded over $20,000 in crypto during the last fiscal year.
Regardless of this tool, there’s one thing that remains unchanged; government agencies are paying close attention to crypto holders, monitoring users and transactions to ensure compliance with regulations. Known your customer and anti-money laundering laws prevent crypto exchange users from going completely dark. Companies are forced to cooperate with government agencies despite their desire to ensure their customers’ information. Agencies worldwide request crypto exchanges to inform them about citizens and their crypto investments, the recurrence of their trades, the source of the funds, the profit they take, transactions they make, and so on.
The reality is that if you’ve ever held cryptocurrencies in a centralized exchange, or completed a KYC or AML process, then it’s highly probably that government agencies already know about your crypto assets.
