Coinbase, the largest the United States cryptocurrency exchange sells to Immigrations and Customs Enforcement a set of features used to track and identify cryptocurrency users, according to contract documents shared with The Intercept.
News of the deal, potentially worth about $ 1.37 million, was first announced last September, but details of exactly what options will be offered to ICE’s controversial internal security investigation unit were unclear. But a new contract document received from Jack Pulson, director of the Tech Inquiry Monitoring Group and shared with The Intercept, shows that ICE now has access to various forensic features provided by Coinbase Tracer, the company’s intelligence gathering tool ( formerly known as Coinbase Analytics).
Coinbase Tracer allows customers, both in the public and private sectors, to track transactions through a blockchain, a distributed register of transactions, an integral part of the use of cryptocurrency. While blockchain registries are usually public, the sheer volume of data stored in them can make tracking money from author to recipient very difficult, if not impossible, without the help of software tools. Coinbase offers Tracer for use in both corporate compliance and law enforcement investigations, emphasizing its ability to “investigate illegal activities, including money laundering and terrorist financing” and “linking [cryptocurrency] addresses to real-world objects. “
According to a document released at the request of the Freedom of Information Act, ICE can now track transactions made through nearly a dozen different digital currencies, including Bitcoin, Ether and Tether. Analytical features include “Multiple Link Analysis for Incoming and Outgoing Funds”, which provides ICE with a look at the translations of these currencies, as well as “Transaction Blurring and Secure Transaction Analysis”, aimed at thwarting methods that some cryptocurrency users use to launder their funds or mask their transactions. The Treaty also provocatively provides “Historical Geo-Tracking Data”, although it is not clear what exactly this data consists of or where it came from. An email published through FOIA’s request indicates that Coinbase does not require ICE to agree to an end-user license agreement, a standard law that imposes restrictions on what the customer can do with the software.
Asked about the ICE contract and related data, Coinbase spokeswoman Natasha LaBranche directed The Intercept to a disclaimer on its website, which states that “Coinbase Tracer extracts its information from public sources and does not use Coinbase user data.” . LaBranche did not answer questions about how ICE uses Coinbase Tracer, or whether the company has imposed any restrictions on this use.
In recent years, Coinbase has made concerted efforts to present its intelligence functions to government agencies, including the IRS, the Secret Service, and the Drug Enforcement Administration. Earlier this month, Coinbase’s global intelligence vice president, John Kotanek, testified before a congressional committee that his company wanted to help the domestic security cause. “If you are a cyber criminal and use cryptocurrency, you will have a bad day. … We will track you down and find this funding and hope to help the government seize this cryptocurrency. Coinbase’s government work has proved very controversial to many cryptocurrency fans, perhaps due to the long libertarian streak in this community and the fact that these currencies are so often used to facilitate various forms of fraud.
The Coinbase Tracer tool itself was born in contradiction. In 2019, Motherboard announced that Neutrino, a blockchain analysis company that the company acquired to create Coinbase Tracer, “was founded by three former employees of the Hacking Team, a controversial Italian surveillance provider who was caught selling several times. spyware on governments with questionable human rights records, such as Ethiopia, Saudi Arabia and Sudan. Following public outcry, Coinbase announced that these employees would “leave” the company.
Homeland Security Investigations, the ICE division that purchased the Coinbase instrument, is responsible not only for immigration issues, aiding and abetting migrant raids and deportation operations, but also for wider transnational crime, including various forms of financial crime. It is not clear for what purpose ICE will use Coinbase. The agency could not be reached immediately for comment.
Corrigendum: June 29, 2022
A previous version of this article mistakenly attributed a quote from Coinbase Vice President John Kotanek to the company’s CEO Brian Armstrong.
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