The hashtag #DeleteCoinbase has been trending on cryptocurrency Twitter for a while now to protest the acquisition of Neutrino. This anger, while extreme, is not unfounded. A while ago, Washington Post reported that Neutrino’s hacking team was working directly with the Saudi Arabian government. There was a reason to believe that the team even had ties with an enforcement group that allegedly killed Jamal Khashoggi, a dissident journalist. The suite was tagged necessary for governmental interception and was used for the surveillance and arrest of several journalists in the UAE and Ethiopia.
Coinbase recently announced the acquisition of a blockchain analytics outfit, Neutrino. This sparked up anger from many fans on cryptocurrency social media because Neutrino has a controversial history. The outfit’s executives, CRO Marco Valleri, CEO Giancarlo Russo, and CTO Alberto Ornaghi, were all in charge of the hacking team that developed and sold spyware to government agencies that have a history of human right abuses.
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For now, it’s not clear how many people have deleted their accounts or how many will delete. However, many influential figures in the space have said that this Neutrino acquisition is a deal breaker for Coinbase which currently has over 30 million accounts. One of them is the founder of Shiny Pony Ventures, Meltem Demirors. Speaking to the cryptocurrency news agency, CoinDesk, Demirors said:
“There are so many other services out there that do [blockchain analysis] that don’t have these reputational issues, and frankly the ethical issues that some of these Neutrino founders have. This example, to me, clashes with all the messages [Coinbase] are trying to put out there about creating an open financial system, a more inclusive financial system. This acquisition of Neutrino supports the idea of using bitcoin for surveillance capitalism.”
Is The Neutrino Acquisition Worth The Backlash Coinbase Has Incurred?
Varun Srinivasan, the director of product and engineering at Coinbase said that the Neutrino acquisition will allow them to expand their cryptocurrency listings quickly while they retain in-house data analysis. The company was fully away of Neutrino’s bad reputation but they believed that the benefits of the acquisition outweighed the possible negative repercussions.
Meanwhile, some of the angry users have reported difficulties in trying to close their accounts. One of the reasons is that users who wish to close their accounts must empty it completely before they can do so. Most users have to leave a fraction of Bitcoins that would remain after transaction fees have been deducted. These fractions are often too small to send out on their own before an account can be closed. Even if the users transfer more Bitcoins to Coinbase and try to send it back, the same issue might arise.
Coinbase is the largest cryptocurrency exchange in the United States per volume and one of the most popular in the world. This sort of reputation damage isn’t what the exchange needs at the moment. However, it’s not clear if the protest would leave a significant dent on the company’s image. It still isn’t a good idea to underestimate the power of the people. Coinbase would need strong damage control to calm users down so it doesn’t lose a good fraction of its customers.
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