A few weeks ago US cryptocurrency exchange Coinbase came in for a tremendous amount of criticism from consumers and investors after a recent acquisition. The exchange purchased a blockchain analytics firm, Neutrino, whose CEO, CTO, and chief resource officer had all previously worked at the security firm Hacking Team. Hacking Team was notorious in the digital world for its creation of online surveillance software and its connection to human rights abuses and crimes throughout the world.
Hacking Team software had been sold to numerous autocratic and repressive governments, including Russia, Saudi Arabia, Sudan, and Turkey. It is also widely suspected of having provided the tools to enable the hacking of dissident Saudi journalist Jamal Khashoggi, who was murdered and dismembered at the Saudi consulate in Istanbul last year. Needless to say, once that acquisition went public it ruffled quite a few feathers. Coinbase responded by letting go any Neutrino employees who had previously been involved with or worked for Hacking Team.
Coinbase further explained that it needed to acquire Neutrino because its previous analytics provider had sold client data to outside parties. That was a devastating statement that significantly undermined confidence in Coinbase’s ability to keep customer data private. Coinbase followed by stating that the exchange “never shared our customers’ personally identifiable information with any third-party blockchain analysis vendors.” That’s some small relief, but it still highlights the importance of working with trusted partners when investing in Bitcoin and cryptocurrencies.
Trusting large exchanges and online portals that may be here today and gone tomorrow with personally sensitive information is incredibly risky. It’s important when investing in Bitcoin to rely on partners who have a track record of keeping customer data safe and secure. Given the prevalence still of attacks on exchanges, investors need to continue doing due diligence to keep their information private. That’s yet another reason to consider investing through a Bitcoin IRA, so that your private information held by your custodian will remain private and won’t be sold to third parties.