By Things are not looking great for Coinbase. In a recent move that sparked a wave of outcries, cryptocurrency exchange Coinbase acquired Neutrino back in February.
This move formed part of the exchange’s efforts to offer more diverse crypto assets across borders. However many users are livid with Coinbase’s decision to acquire the firm because of the executive suite’s past work with the startup Hacking Team, who sold spyware to several governments who are known for human rights crimes.
Since then, the #DeleteCoinbase hashtag has been echoed across crypto Twitter with many bitcoin users closing their accounts in protest of the controversial acquisition.
However, it’s currently unclear just how widespread this backlash has gone. If you were to google #DeleteCoinbase, the hashtag produces more than 500 results, but not all are unique, and 500 is a drop in the ocean when one considers Coinbase’s 13 million accounts.
Influential Figures Are Exiting:
That being said, for many big names in the crypto ecosystem, this move was a definite deal-breaker.
One such name belongs to Meltem Demirors, founder of Shiny Pony Ventures and chief strategy officer at the asset management firm CoinShares said she would no longer be using Coinbase following their decision.
She added:
“There are so many other services out there that do [blockchain analysis] that don’t have these reputational issues, and frankly the ethical issues that some of these Neutrino founders have,” Demirors said. “This example, to me, clashes with all the messages [Coinbase] are trying to put out there about creating an open financial system, a more inclusive financial system.”
In a nutshell, she stated:
“This acquisition of Neutrino supports the idea of using bitcoin for surveillance capitalism.”
At the time, Coinbase declined to make any comments about the number of users who have left their platform.
Why Did Coinbase Take The Risk?
Just last month, Varun Srinivasan, director of engineering and product at Coinbase stated that by acquiring Neutrino, it would allow Coinbase to expand their crypto listings faster and retain data analysis services in-house as well. Furthermore, in a statement made to The Block, a Coinbase spokesperson claimed that the exchange was well aware of Neutrino’s controversial past but at the same time felt that the business rewards far outweighed the possible controversy.
These reputational risks were no secret. Back in 2013, Reporters Without Borders, a non-profit publication dubbed Hacking Team one of the five corporate “Enemies of the Internet”, for their role in helping many government’s shutdowns on critics. These include a number of shady situations in Mexico, Sudan, Kazakhstan and many other nations.
Furthermore, in 2017, the Italian Ministry of Economic Development stated that Hacking Team’s exports of their surveillance tech to countries such as Egypt are a clear risk to human rights in many foreign nations.
That being said, many who have been offended by Coinbase’s ties to Hacking Team via Neutrino, are posting complaints on the exchange’s social media’s channels about experiencing trouble when attempting to shut down their accounts.
This glitch which only seems to enrage outraged users, even more, is due to the fact that an account needs to be completely drained in order to close it, and many users retain small fractions of bitcoin, known as “dust” which are left over after transactions as a result of fees and price fluctuations. Of course, it is commonly found that these fractions are too minuscule to send in order to empty accounts.
Currently, only time will tell whether the controversy will have an actual effect on Coinbase’s enormous user base if one considers how easy it is for entry-level users to so sign up and the sheer number of users currently on the platform.
What are your thoughts on the possible backlash that Coinbase is facing? Could it truly become an issue, or will this, like many things in the cryptocurrency ecosystem, blow over?
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