To anyone who has used the platform, it is pretty obvious that things are not quite right and that it is probably not a good idea to store your cryptocurrency holdings there. But now there is solid proof that Coinbase really is just a government-run honeypot operation that quietly sells its users' data and information to the highest bidder – in this case, Big Brother.
According to a report from The Intercept, Coinbase has been secretly selling geo-tracking and other user data to Immigration and Customs Enforcement (ICE) for quite some time now. Such information is then being used to track and surveil cryptocurrency users.
Back in August 2021, Coinbase "sold a single analytics software license to ICE for $29,000," the report explains. One month later, Coinbase sold another $1.36 million worth of software to the federal agency.
These sales, according to a contract outlining the details of them, allow for ICE to access "a variety of forensic features provided through Coinbase Tracer," which is the name of Coinbase's internal intelligence tool.
"The tool allows people to trace transactions through the blockchain," reports Zero Hedge. "Coinbase markets the software primarily for use in corporate compliance and law enforcement."
"It boasts that the tool has the ability to 'investigate illicit activities including money laundering and terrorist financing' and 'connect [cryptocurrency] addresses to real world entities.'"
If you use Coinbase, ICE can now see your every crypto move
The movement of more than a dozen digital currencies is now fully trackable by ICE, thanks to Coinbase selling its users down the river for government cash. ICE also now possesses "historical geo tracking data," though the details of this are somewhat unclear.
Natasha LaBranche, a spokesperson for Coinbase, explained, when asked, that the contract referenced in The Intercept report is part of Coinbase's disclaimer, or fine print, stating:
"Coinbase Tracer sources its information from public sources and does not make use of Coinbase user data."
Coinbase is also willing to sell user data to the Secret Service and the Internal Revenue Service (IRS), the latter of which could use it to track down trades and tax them.
"If you are a cyber criminal and you're using crypto, you're going to have a bad day," bragged Coinbase vice president of global intelligence John Kothanek during a congressional hearing from earlier this month about how his platform is a snitching operation working on behalf of the government.
"We are going to track you down and we're going to find that finance and we are going to hopefully help the government seize that crypto."
Keep in mind that the word "criminal" increasingly encompasses just about everything that Americans do these days. If the government criminalizes it, you become a "criminal" the moment you do it.
This may include buying gas-powered yard appliances in California once they become illegal, for instance, or purchasing an unapproved water filter and having it shipped to Iowa.
"I'll bet Coinbase gets a percentage of the crypto seized using their tools," wrote a commenter at Zero Hedge about how this little grift more than likely works.
"One simple rule to understand: If it's digital, it can never be totally secure," responded another.
Another person claiming to have worked on the design and mechanisms of tracking bitcoin and other cryptocurrencies "using the rootkit of opensource" – we cannot verify this, of course – claims that every single crypto transaction "has been tracked for over 12 years by the NSA and U.S. Army Cybercommand."
"Nothing you do on the internet is anonymous," this person added. "Nothing."
More related news can be found at BitRaped.com.
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