While Coinbase seems to be facing imminent court action from the Security and Exchange Commission, it is signing new deals with other government agencies.
The SEC is fighting against the Coinbase lending product, and the exchange says it refuses regulation through litigation. However, all the threats seem not to be holding the exchange back.
Since August, the United States Immigration and Customs Enforcement Agency has made a new contract with Coinbase to create software. This new deal makes it the second one for Coinbase recently. This latest deal is all about Coinbase developing an application development SaaS for the US Homeland Security valued at $1.36 million.
The contract between Coinbase and the US Customs Enforcement Agency took effect on September 16. With this contract, Coinbase gets $455,000 from the agency. But then, there may be an extension to the contract, which could span three years. Thus, Coinbase is expecting to receive about $1.36 million.
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This latest deal with ICE makes it the second contract Coinbase is signing with the agency. Thus, the exchange has obtained a $30,000 deal to deliver “computer forensics services” to ICE by August.
Community’s Response Towards The New Deal Bagged By Coinbase
There was a resulting backlash from the cryptocurrency community following the news. According to Alex Gladstein of the Human Rights Foundation, the remuneration is low. His reason being that Coinbase’s scale of operations and the risk to their reputation following the partnership with ICE is too high.
Like, this isn’t very much money for Coinbase in the grand scheme of things.
Strange that they would risk so much reputationally for such a relatively small sum.
— Alex Gladstein
(@gladstein) September 18, 2021
Gladstein believes that “the remuneration is quite low for an exchange like Coinbase in the long run. It is quite strange that Coinbase can risk their esteemed reputation for such a little sum,” he asserted.
The news of this contract led to criticisms regarding Coinbase’s acquisition of Neutrino-blockchain analytics startup in 2019.
At the time of acquisition, there were reports that Neutrino’s backers were formerly among the Hacking Team- an enterprise disclosed to be spies for authoritarian regimes against journalists.
Furthermore, Giancarlo Russo, the Neutrino CEO, was former Hacking Team COO, while Alberto Ornaghi was the CTO for above 8 years. The Washington Post reports that this Italian company was connected to the killings of so many Middle East journalists between 2013 & 2018.
Due to these suspicions leveled against the Neutrino staff because of their former connections with the dubious Hacking Team, Coinbase CEO made a statement that March 2019 that the suspected former Hacking Team staff will not fulfill their position at Coinbase.
Response To The Contract
The contract between Coinbase and ICE got a response from Jesse Powell – Kraken CEO. He tweeted that the acquisition of Neutrino and this contact with the government is very shocking.
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It has also signed another deal with the United States Secret Service for the development of the Cyber Fraud Task Force last year’s July. The task force was to look into the usage of crypto for criminal acts.
The crypto-market is down by 7% | Source: Crypto Total Market Cap on TradingView.com
At present, the crypto exchange is stuck in regulatory struggle with SEC (Securities & Exchange Commission).
Featured Image From PCMag, chart from TradingView.com