INSUBCONTINENT EXCLUSIVE:
Last month, Coinbase’s acquisition of blockchain analytics startup Neutrino was criticized because of the founders’ ties to a
controversial surveillance technology company called Hacking Team
Today Coinbase CEO Brian Armstrong said in a blog post that employees of Neutrino who had previously worked at Hacking Team will transition
out of Coinbase, instead of joining its team in London as originally planned.Neutrino maps blockchain networks, focusing on crypto token
transactions, and one of its main services is working with law enforcement to track stolen digital assets, investigate ransomware attacks
and analyze activity on the “darknet.” Before launching Neutrino, CEO Giancarlo Russo, CTO Alberto Ornaghi and chief research officer
Marco Valleri, worked at Hacking Team, a security and surveillance tech company that has been criticized for selling products to governments
with a history of human rights violations, including Egypt, Kazakhstan, Russia, Saudi Arabia, Sudan and Turkey
As The Intercept reported in 2015, Hacking Team’s malware has also been found on the computers of activists and journalists.The close link
between Hacking Team and Neutrino concerned many members of the blockchain community
Amber Baldet, CEO of Clovyr and the former lead of JP Morgan’s blockchain program, told Motherboard that “given the number of accounts
Coinbase has opened, how they choose to implement compliance tools and their relationship with law enforcement will impact a lot of
people.”In his post, Armstrong said there was “a gap in our diligence process” while Coinbase was shopping for a blockchain analytics
startup to acquire.“While we looked hard at the technology and security of the Neutrino product, we did not properly evaluate everything
from the perspective of our mission and values as a crypto company,” he wrote
“We took some time to dig further int this over the pats week, and together with the Neutrino team have come to an agreement: those who
previously worked at Hacking Team (despite the fact that they have no current affiliation with Hacking Team), will transition out of
This was not an easy decision, but their prior work does present a conflict with our mission
We are thankful to the Neutrino team for engaging with us on this outcome.”“Coinbase seeks to be the most secure, trusted, and legally
compliant bridge to cryptocurrency,” he added
“We sometimes need to make practical tradeoffs to run a modern, regulated exchange, but we did not make the right tradeoff in this
We will fix it and find another way to serve our customers while complying with the law.”Coinbase achieved an $8 billion valuation last
October after raising a $300 million Series E and is focused on broadening its user base from consumers to institutional investors
Neutrino’s eight employees had planned to move to Coinbase’s office in London has part of the acquisition.
