Leading cryptocurrency exchange Coinbase has inked a new partnership with the US Department of Homeland Security. A report disclosed this news earlier today, noting the deal involves Coinbase developing technology for the agency. Reportedly, the agreement will see the San Francisco-based exchange net as much as $1.36 million (£0.99 million).
According to the report, the contract started on September 16, and Coinbase will deliver application development software for the US Immigration and Customs Enforcement Division (ICE). For this work, the department will pay Coinbase $455,000 (£332,630.02). However, there is a possibility of the agency extending the contract to span three years. In this event, the exchange will get approximately $1.36 million (£0.99 million).
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Per the publication, this is the second agreement between Coinbase and ICE. The first deal came in August when the agency offered Coinbase $30,000 (£21,934.95) to deliver computer forensics services. While this might seem like US agencies recognizing that firms in the crypto sector have something to offer, the crypto community did not receive this news well.
For instance, the Chief Strategy Officer at Human Rights Foundation, Alex Gladstein, pointed out that the amount Coinbase received in the deal was low. According to him, the exchange should have demanded a higher amount, seeing as the deal posed a reputation risk.
Coinbase’s partnership with ICE brings it under fire
The news of Coinbase’s collaboration with ICE also renewed concerns about its acquisition of Neutrino, a blockchain analytics startup, in 2019. In the year, a report unveiled that the people behind Neutrino were former members of Hacking Team, a firm that helped authoritarian regimes spy on journalists. Reportedly, Neutrino’s CEO, Giancarlo Russo, was the former COO of the Hacking Team. Additionally, Neutrino’s CTO, Alberto Ornaghi, had been part of the Hacking Team for over eight years.
Trying to minimize the backlash at the time, Coinbase’s CEO, Brian Armstrong, said Neutrino staff with connections to Hacking Team would not take roles in the exchange. Since its acquisition of Neutrino, Coinbase also partnered with the US Secret Service to help the agency investigate the US of crypto in illicit activities. While this is a noble course, the exchange came under fire because the crypto community is big on privacy.
Although Coinbase seems to be on good terms with government agencies, this is not the case. Before joining hands with ICE, the US Securities Exchange Commission (SEC) informed the exchange that it would file a lawsuit against it if it goes on to launch its lending product named Coinbase Lend.
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