Bitcoin exchange giant Coinbase has acquired Chainalysis competitor Neutrino in an effort to enhance its compliance efforts and regulatory relationships. Neutrino uses blockchain analytics to identify potential money laundering or other illegal transactions on the blockchain. Until its acquisition, it was one of a few companies growing in the space of analyzing blockchains. Its work mainly benefits crypto exchanges, regulators, and other centralized powers.
According to Coinbase, companies like Chainalysis, Whitestream, and Elementus are “necessary” in an “open financial system.”
“Blockchain intelligence is increasingly important in the crypto ecosystem, and is necessary to achieve our mission of bringing the open financial system to the world. By analyzing data on public blockchains, Neutrino will help us prevent theft of funds from peoples’ accounts, investigate ransomware attacks, and identify bad actors. It will also help us bring more cryptocurrencies and features to more people while helping ensure compliance with local laws and regulations.”
Coinbase has chosen to buy the company outright for an undisclosed price. Neutrino’s team will move from its base in Italy to Coinbase’s offices in London.
Coinbase: Bitcoin Bank Extraordinaire
Long the subject of derision at the community level of Bitcoin and other cryptocurrencies, Coinbase’s acquisition is one more in a list of “anti-crypto” charges against it.
Congrats to Coinbase on the acquisition of chain analysis startup Neutrino!
FYI, the CEO, Giancarlo Russo, was ex-COO of HackingTeam (https://t.co/qyQ6mLU8XE), who sold “offensive intrusion and surveillance capabilities to governments, law enforcement agencies and corporations.” pic.twitter.com/VVza5AjIYa
— Arjun Balaji (@arjunblj) February 19, 2019
Neutrino’s CEO, Giancarlo Russo, formerly worked as Chief Operating Officer for HackingTeam, the government security contractor that was famously hacked in 2015. Documents leaked by the HackingTeam attackers showed that the company willingly aided repressive governments including Saudi Arabia, who wanted to buy the company.
Crypto community members are unfriendly to anything which can lead to censorship. That is the bottom line for many.
If it leads to censorship, it’s poison.
weird flex, but ok?
goodbye @coinbase 💔not interested in having my data, identity, and crypto ownership data served to every government agency on a silver platter. https://t.co/13iQ20evnk
— Meltem Demirors (@Melt_Dem) February 19, 2019
Very little of Coinbase’s business model has been favored by long-time members of the crypto community.
Nevertheless, Coinbase has grown to be an $8 billion company in spite of regular complaints. Its notorious customer support and various compliance initiatives frequently raise ire. Whatever you have to say against them, they’ve done a great job onboarding millions of people. People who might not otherwise have been able to join the cryptocurrency world.
Just another large step to @coinbase be the @facebook of crypto in the worst possible way
— BitFormPayments (@bit_form) February 19, 2019
Now Can We Have a Crypto ETF?
According to Coinbase, Neutrino is superior to Chainalysis, a leader in the space.
“Neutrino’s technology is the best we’ve encountered in this space, and it will play an important role in legitimizing crypto, making it safer and more accessible for people all over the world.”
Coinbase director of product and engineering Varun Srinivasan added in a CoinDesk interview:
“We want to bring them to the American market and the international market and introduce them to companies that are doing all kinds of things with crypto that need blockchain intelligence.”
Is blockchain intelligence the last mile?
We have regulated custodians, exchanges, payment processors, and a thriving community of enthusiastic users. We also have several multi-million dollar firms dedicated to preventing fraud and money laundering. Now can we have a Bitcoin ETF?
Venerability of markets is an important part of the SEC’s concerns toward cryptocurrency investment products. One persistent fear is the potential for market manipulation in Bitcoin. Such concerns aren’t helped any by the accusations against Bitfinex and Tether regarding the 2017 bull run.
Featured Image from Shutterstock
