Remember when Coinbase was just the popular exchange people occasionally rolled their eyes at for trying to trademark popular crypto phrases?
What a difference two to three months makes: Now the exchange is embroiled in a #DeleteCoinbase Twitter movement stemming from the acquisition of Neutrino, a blockchain analytics firm with ties to Hacking Team, an Italian startup that sold spyware to governments with shady human rights records. Now, Coinbase is trying to cut those Hacking Team ties with the March 4 announcement that the exchange would be letting go of the Neutrino employees who previously worked at Hacking Team, "despite the fact that they have no current affiliation with Hacking Team."
Meet the Team
Coinbase announced the Neutrino acquisition on February 19, stating that the blockchain analytics firm would allow the exchange to bring in more cryptocurrency options as well as "prevent theft of funds from peoples' accounts, investigate ransomware attacks, and identify bad actors." The news of the acquisition spread, and it was quickly pointed out on Twitter what exactly Neutrino is and the nature of its ties to Hacking Team.
In 2001, Neutrino's chief technology officer Alberto Ornaghi and chief risk officer Marco Valleri both developed Ettercap, a program used to remotely manipulate computers. Ornaghi and Valleri were then contracted by the Milan police department to write a Windows driver that would allow the department to listen in to a target's Skype calls. Eventually, the two founded Hacking Team, bringing in Giancarlo Russo, Neutrino's CEO, as the spyware company's chief operating officer.
Hacking Team presents itself as "the hacking suite for governmental interception" that provides "easy-to-use offensive technology to the worldwide law enforcement and intelligence communities." The company's spyware has been used by a number of governmental agencies, including the Saudi Arabian enforcement group that allegedly murdered journalist Jamal Khashoggi and Ethiopian spies who allegedly used the spyware to target Ethiopian journalists based in the US.
In 2013, the nonprofit organization Reporters Without Borders called Hacking Team one of the five corporate "Enemies of the Internet" for its spyware's role in helping governments "capture the passwords of journalists and netizens."
The Neutrino Fallout
With Neutrino, Ornaghi, Valleri, and Russo now focus on "develop[ing] solutions for monitoring, analyzing and tracking cryptocurrency flows across multiple blockchains." The #DeleteCoinbase movement got off and running shortly after Neutrino's purchase by Coinbase as its ties to Hacking Team prompted more backlash from the Twitter community.
After the acquisition and the #DeleteCoinbase fallout, Coinbase commented on the situation, telling Motherboard the exchange had reviewed the Neutrino cofounders' involvement with Hacking Team before purchasing the blockchain analysis firm, but Neutrino's technology was too important for Coinbase to pass on.
Motherboard reported Coinbase's response on February 26, but the exchange's comments since suggest a review of the cofounders' involvement with Hacking Team was never a large part of the acquisition plan. On March 1, Christine Sandler, Coinbase's head of sales, told Cheddar the exchange was just now looking into the backgrounds of the Neutrino employees associated with Hacking Team. Furthermore, in yesterday's announcement, Coinbase stated that, while they had "looked hard at the technology security of the Neutrino product," the exchange had not "properly evaluate[d] everything from the perspective of our mission and values as a crypto company."
Coinbase's March 4 statement doesn't clarify which Neutrino employees were involved with Hacking Team or which employees will be let go. With the announcement coming after the #DeleteCoinbase movement took off, it's easy to make the connection between the two events, but it'll be hard to gauge how much influence the movement has over Coinbase's 25 million users.