Investigative blockchain firm Chainalysis published an official blog post on its website detailing the steps taken by the firm during its analysis. The post clarifies that the company does not collect or sell users' personal data from the cryptocurrency exchanges it does business with. The explanatory post arrives just days after Coinbase's controversial acquisition of Neutrino and reports that Coinbase has previously worked with firms that have sold user data.
After Coinbase's February 19 announcement that the exchange had acquired blockchain analytics firm Neutrino, news of the firm's ties to Hacking Team, an Italian startup that sold spyware to governments with shady human rights records, unfolded on Twitter. By March 1, Christine Sandler, Coinbase's head of sales, told Cheddar that the exchange was looking into Neutrino's ties to Hacking Team but that the acquisition occurred because Neutrino's blockchain analysis technology was too good to pass on.
This is where Chainalysis fits into the story. Sandler explained further why Coinbase decided to go with Neutrino, saying that the exchange had been burned in the past by analysis firms that had sold user data to third parties.
While Sandler does not openly name any analysis firms in her explanation, Chainalysis certainly seems compelled to expunge any notion that the firm sells or even collects exchange user data. The firm states:
"Exchanges that use Chainalysis … submit their transaction data – not personally identifiable customer data – to Chainalysis to automate the process of transaction monitoring … Any link from a transaction back to the person or people involved in that transaction must be made outside of Chainalysis because we do not collect any personally identifiable information from exchanges."
Chainalysis explains that the firm focuses on flagging transactions "based on indicators of risky behavior," like transaction destinations known to be darknet markets or terrorist financing organizations. "In short," the statement reads, "Chainalysis provides service-level identification, not individual-level identification."
Chainalysis wasn't the only blockchain analytic firm to respond to Sandler's interview. Elliptic also published an explainer piece that references its business with Coinbase. Elliptic states that its exchange clients, "including Coinbase, do not provide us with any personally identifiable information about their users." The firm further asserts that Sandler's comments propagate a fundamental misunderstanding of "the data we analyse, the insight we share with our clients, and the role we play in the industry."