Coinbase selling Crypto Surveillance Tools to the DEA and IRS

Discussion in 'Cryptocurrencies' started by Trader Curt, Jun 9, 2020.

  1. [​IMG]
    Coinbase Offers US Feds New Crypto Surveillance Tools
    Jun 5, 2020 at 22:10 UTC

    It is unclear the extent to which Coinbase Analytics, which has ties throughout the gargantuan crypto exchange, utilizes customer data. (Credit: CoinDesk archives)

    Danny Nelson
    Coinbase is getting in on the government blockchain analytics game.

    The behemoth cryptocurrency exchange has initiated procurement deals with the Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) for a cryptocurrency investigations tool called “Coinbase Analytics,” according to publicly available documents. The Block first reported on the prospective deals Friday.

    Coinbase Analytics has close ties with Coinbase’s entire product ecosystem, as its Senior Product Manager “collaborates” with “Coinbase Consumer, Coinbase Pro, and Coinbase Custody as well as” Coinbase’s payments and crypto division, according to an undated but now closed job posting.

    It was unclear at press time Friday the extent to which Coinbase Analytics utilizes internal customer data.

    Coinbase joins a crowded field of cryptocurrency analytics companies – Chainalysis, Elliptic, CipherTrace and others – vying for a piece of the federal pie. Agencies from all corners of the U.S government regularly contract with crypto intel firms, inking deals for their tracing software worth millions, and sometimes stretching years.

    Read more: Inside Chainalysis’ Multimillion-Dollar Relationship With the US Government

    Apparently, Coinbase, who bought blockchain intelligence firm Neutrino in February 2019, is about to undercut the competition.

    “This is the least expensive tool on the market and has the most features for the money,” read a DEA May notice so heavily redacted that those features’ specifics are unclear. But they are unique, as the IRS notice, published in April, notes Coinbase Analytics has “enhanced law enforcement sensitive capabilities that are not currently found in other tools on the market.”

    The DEA’s interest appears to stem in part from Coinbase Analytics’ pinpoint accuracy. It has “some of the most conservative heuristics used in commercial blockchain tracing tools,” a “critical” distinction in avoiding false positives, the DEA notice read.

    Neither the DEA or IRS disclosed the bottom-line value of their prospective deals, which federal contract websites indicate have not been finalized yet. Both agencies seek year-long contacts with Coinbase, and the DEA deal is not more than $250,000.

    A Coinbase spokesperson did not immediately return a request for comment.

    The IRS has recently begun ramping up its activities in the cryptocurrency space, sending tax firms notices last month requesting proposals for auditing support.


    This is big. I can see a surge in privacy coins in the near future...
    johnarb likes this.
  2. johnarb



    This is big. I can see a surge in privacy coins in the near future...


    There's an easy way to sever any tracking of bitcoin (or any cryptocurrency) by trading them to Monero then trading them back to bitcoin using an instant swap website, but maintaining the privacy requires constant awareness of your actions (bitcoin transactions).

    The 2 important pieces are a local monero wallet and the (instant-swap) destination local bitcoin wallet. How you transact from this final bitcoin wallet is your decision (whether you transact with counterparties that collect your personal info) and perhaps another (separate) bitcoin wallet for complete privacy (i.e. store of value/long term hold).

    I would recommend linux full desktop bitcoin wallets for previous paragraph with VPN as light wallets may have some bad actors hosting the "servers" (i.e. electrum), but I digress....
    Trader Curt likes this.
  3. All anyone would have to do is use a Bitcoin tumbler. You just put it into a pot with thousands of other peoples Bitcoins and it scrambles them up so the Bitcoin you receive is someone else's coin. And the Dark markets all keep up with the latest news, so they will just find a way to annonmize the payments even more. Some wallets even have automatic changing addresses. It's going to be very hard for them to catch most. I'm sure they will probably catch some people, but most will just find a way to hide even more.
  4. johnarb


    I've never used a bitcoin tumbler so hopefully I don't say anything inaccurate and my suggestion in my previous post was not meant for hiding illegal activities but to ensure privacy. There are many reasons to be protective of your bitcoin identity and one example is that if you buy coffee at a small store and you used a wallet that contains a significant amount, say $10K, someone at that place, maybe even an employee, might be a bad person could tell "friends" to follow you to "force" you into giving up your bitcoins to them. You can google that the best way to crack your uncrackable bitcoin password/private key is to use a $5 wrench.

    Back to the bitcoin tumblers, some have been shutdown and others have shutdown, voluntarily. They rely on trusting a centralized service, and if I'm correct, all you're doing is mixing your coins with others that have a high probability of "illegal activities". Many users have lost coins to scam tumblers. dyor, though, on this as I don't have actual experience, I'm just repeating things I've read on it.
    Trader Curt likes this.
  5. Yeah i've never been a fan of the tumblers. Apart from charging you, you have to worry about if your coin is even being tumbled at all and even getting it back. And i'm sure if anyone did some deep investigating then they could find out where the coins came from and where they went.

    When Binance was hacked the thieves used a tumbler and they were still able to track down the wallets of the stolen 4000 Bitcoins. There is nothing anyone can do about it but watch to see where it goes.
    johnarb likes this.