Home » Spotlight » Coinbase signs new $1.36M contract with US Customs enforcement agency

Coinbase signs new $1.36M contract with US Customs enforcement agency

By Nagasunder in Spotlight, posted September 21, 2021

Coinbase, a leading cryptocurrency exchange in the United States, has obtained a contract for up to $1.36 million to create technology for the Department of Homeland Security.

Under the agreement, Coinbase has been contracted to deliver “application development software as a service” for the U.S. Immigration and Customs Enforcement division (ICE).

The contract went into force on September 16th, and Coinbase will collect $455,000 from the department. However, the contract might be extended for up to three years in total, with Coinbase receiving up to $1.36 million.

The agreement marks Coinbase and ICE's second collaboration, with the exchange previously securing a $30,000 contract to provide "computer forensics services" to the agency in August.

The news sparked outrage in the cryptocurrency jobs community, with Human Rights Foundation chief strategy officer Alex Gladstein claiming that the compensation is meager given the magnitude of Coinbase's activities and the reputation damage caused by the partnership: “This isn’t very much money for Coinbase in the grand scheme of things. Strange that they would risk much reputationally such a relatively small sum.”

The news has also resurrected criticisms concerning Coinbase’s 2019 acquisition of blockchain jobs and analytics startup, Neutrino.

During the year of the acquisition, it was disclosed that the personnel behind Neutrino had previously worked for Hacking Team, a business that was revealed to have assisted authoritarian regimes in spying on journalists.

Giancarlo Russo, Neutrino's CEO, was the former COO of Hacking Team, and Alberto Ornaghi, the company's CTO, worked there for more than eight years. According to the Washington Post, the Italian firm was involved in the death of several journalists in the Middle East between 2013 and 2018.

In March 2019, Coinbase CEO Brian Armstrong announced that Neutrino employees with former ties to the contentious firm Hacking Team would be transitioning out of their new roles at the exchange.

Responding to Coinbase’s new contract with ICE, Kraken CEO Jesse Powell tweeted: “Even more bizarre is the acquisition they made and reputational hit they took to be able to offer this service to the government.”

Coinbase has also signed contracts with the US Secret Service, which announced the formation of a Cyber Fraud Task Force in July 2020 since its acquisition of Neutrino. The task group has been tasked with investigating the usage of Bitcoin for criminal objectives, with the following statement made later that year:

“Cryptocurrency presents a troubling new opportunity for individuals and rogue states to avoid international sanctions and to undermine traditional financial markets, thereby harming the interests of the United States and its allies.”

Coinbase is currently embroiled in a regulatory tussle with the Securities Exchange Commission. The regulator takes umbrage with its planned stablecoin lending product and threatens to take the company to court.

Source: Cointelegraph