Coinbase, the leading US cryptocurrency exchange, has signed a contract of $1.36 million to develop tech for the Department of Homeland Security.
It has been reported that under the agreement, Coinbase has been contracted to deliver “application development software as a service” for the US Immigration and Customs Enforcement division (ICE).
However, the contract took effect on September 16 and will see Coinbase receive $455,000 from the department. The contract could be extended to last for up to three years in total, which would see Coinbase receive up to around $1.36 million.
The report said that the deal is the second partnership inked between Coinbase and ICE, with the exchange having secured a $30,000 contract to provide “computer forensics services” to the agency in August. The news has received backlash from the crypto community, with Human Rights Foundation chief strategy officer Alex Gladstein asserting the compensation is relatively low given the scale of Coinbase’s operations and the reputation risk posed to the exchange by the partnership.
“This isn’t very much money for Coinbase in the grand scheme of things. Strange that they would risk much reputationally such a relatively small sum.”
Likewise, the news has also resurrected criticisms concerning Coinbase’s 2019 acquisition of blockchain analytics startup, Neutrino. During the year of the acquisition, it was reported that the people behind Neutrino had previously been part of the Hacking Team, a company revealed to have helped authoritarian regimes to spy on journalists.
Giancarlo Russo, the CEO of Neutrino, was the ex-COO of the Hacking Team while its CTO, Alberto Ornaghi, was at the company for more than 8 years. According to the Washington Post, the Italian company was implicated in the murder of a number of journalists in the Middle East between 2013 and 2018. In March 2019, Coinbase CEO Brian Armstrong said that Neutrino staff with prior connections to controversial firm Hacking Team would transition out of their new roles at the exchange.
Thus, Jesse Powell, the CEO of Kraken, said:
“Even more bizarre is the acquisition they made and reputational hit they took to be able to offer this service to the government.”