Opinion
– A exchange that is no different from centralized institutions and traditional financial systems.
Everyone in the space has heard of at least once, even if they have not directly engaged with the platform. The exchange was regarded as the biggest exchange in the space, registering over 50k on a daily basis in 2017.
More so, it grabbed the attention of both the financial market and decentralized market when a article by the Washington Post stated that the exchange had over 20 million users (much more than the second largest broker-dealer firm, Charles Schwab and Fidelity Investments, one of the largest asset managers). The exchange had also brought in a revenue of $1.3 billion.
Apart from its user base, the exchange was known for being a regulatory-compliant platform and its stringent rules in terms of the listed. The exchange was also working towards making the platform more institution-friendly by introducing products and services that serve them the best. Overall, it seemed like the exchange was doing almost everything right, up until Neutrino.
A little background of -Neutrino scene
Neutrino is an Italian-based analytics firm that was recently acquired by . However, instead of accepting this , a vast majority of the community lashed out against the exchange platform, even starting the #DeleteCoinbase movement on leading social media platform such as Twitter and Reddit.
The reason for the movement? Previous association with Hacking Team.
Hacking Team is a firm that sold surveillance tools to private institutions and government authorities. Among them were also governments with poor human rights records, including Saudi Arabia and Venezuela. Reportedly, Hacking Team was also under listed among the five ‘Corporate Enemies of the Internet’ by RSF.
Surprisingly, it turned out that the core team of Neutrino was formerly a part of Hacking Team and would soon start working for , thereby leading to #DeleteCoinbase.
Did the Neutrino stop here? No.
But, did the firm address this problem? Yes. Brian Armstrong, CEO and co-founder of released an official statement pertaining to this issue.
The Big surrounding -Neutrino
In what seemed to be a frail attempt at mending relations with its , the Director of Institutional Sales, Christine Sandler, spoke about why acquired Neutrino despite knowing its connections to Hacking Team, in an interview with Cheddar.
Reason: Industry leading best-in-class technology.
Now remember, most people prefer giving the good before the bad. This situation went through a similar process.
Right after stating that reason, the Director stated that the “compelling” reason for the acquisition was that their analytics providers were selling their client data to outside sources/third-party firms. This acquisition would allow the platform to regain control over ’ data, she further said.
Interesting catch, it has been over ten days since the exchange announced the acquisition. Over ten days! And, not a single word about this to its , considering that they would have known about the data breach for a much longer time.
For anyone who has forgotten the most common reaction of the space during the Facebook-Cambridge Analytics , here’s a reminder,
Even if is not based on , it is still a major player in the and space.
action
Earlier today, the CEO of , Brian Armstrong published an official statement addressing the -Neutrino-Hacking Team . In his statement, he said that analytics was one of the key pieces required for an exchange associated with banks, implementing KYC and AML programs.
Armstrong stated that that they were previously associated with several vendors for analytics services. However, these vendors did not support all the assets they wanted to have on the platform.
Statement issued: “So, we knew at some point we would need to bring this capability in house. We examined the players, found that Neutrino had some of the best technology in this area and decided to acquire them.”
Statement implied: Do not want to address the client data breach topic. So, we are going to make some reasonable excuse that everyone would probably not question.
Statement issued: “However, we had a gap in our diligence process. 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 company.”
Statement implied: Did not think the association with Hacking Team would be such a huge issue for the community. Like, what was the big deal?
“We took some time to dig further into this over the past week, and together with the Neutrino team have come to an agreement: those who previously worked at Hacking Team (despite the fact that they have no current affiliation with Hacking Team), will transition out of . “
Statement implied: We wanted the #DeleteCoinbase campaign to stop spreading like wildfire. Even waited for some time for it to die down; but that did not happen so we decided to cut the team previously associated with Hacking Team loose.
“This was not an easy decision, but their prior work does present a conflict with our mission. We are thankful to the Neutrino team for engaging with us on this outcome.”
Statement implied: We are doing this only because of the pressure from the community. #Cantloseoutonmoreusers, so we are going to do something we don’t want to and by doing so, try to look great in the users’ perspective.
The grand conclusion
The above statement by Brian Armstrong had a very interesting conclusion,
“ -and crypto more generally - is about the rights of the individual and about the technological protection of civil liberties. seeks to be the most secure, trusted, and legally compliant bridge to .”
This was followed by,
“We sometimes need to make practical tradeoffs to run a modern, regulated exchange, but we did not make the right tradeoff in this specific case. We will fix it and find another way to serve our while complying with the law.”
The second sentence of the conclusion is something the platform has used in the past, “most secure, trusted, and legally compliant bridge to .” has been a regulatory-compliant exchange and the exchange cooperates with government agencies, if required [P.S. The 13,000 customer data revealed to the IRS because of court order] but there were still users who believe in decentralization using the platform.
Now, read the very first sentence of the conclusion again – “ -and crypto more generally - is about the rights of the individual and about the technological protection of civil liberties” – and ask yourself, does really stand for this? The CEO not only failed to take any action to inform users about the client data , but also failed to address the very existence of it.
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Published at Wed, 06 Mar 2019 21:10:45 +0000
