The reason bitcoin was so dear to cryptocurrency enthusiast was they saw the power in it. The power to make almost anonymous transaction instantly without needing verification from a central governing authority. They saw what it would mean to people who value privacy and want to evade the ever watching eye of the central government.
The privacy of transacting parties and anonymous(or pseudonymous) nature of the cryptocurrency transaction has been put into jeopardy by one of the most popular cryptocurrency exchange Coinbase.
Coinbase–the largest cryptocurrency exchange based in the United States came under scrutiny after it announced the acquisition of Neutrino–an Italy based company which was subject of public infamy for creating spyware and selling them to government agencies around the world.
Marco Valleri, also known as Naga in the hacking community is co-credited with creating Ettercap which was the foundation of the hacking team’s technology. Ettercap is a set of network security tools used for Network protocol analysis and security auditing. Soon after creating Ettercap, they got a call from Milan Police department asking them to write a Windows driver that would enable them to listen in to a target’s Skype calls to which they obliged and instead of being open source and helping public security, they diverged in the direction to form a corporation that sells spying technologies to government agencies.
Coinbase’s most recent venture hasn’t sat well with true cryptocurrency enthusiasts.
When I said it would be great to have more infosec people involved in the “crypto” space, I didn’t mean the largest US exchange should acquire an analysis tools company run by a former Hacking Team member, but here we are
— Amber ☘️ (@AmberBaldet) February 24, 2019
Valeri’s team also has allegedly lied on numerous occasions about anonymity and presence of backdoor access in some of the systems they have built.
Coinbase will now be able to do cross chain transaction analysis with the help of tools from neutrino meaning they will be able to follow transactions between blockchain networks.
In the lights of these events, cryptocurrency enthusiasts have reacted against Coinbase and by the looks of it–are preparing for a mass exodus from their platform. #deletecoinbase was trending on Twitter.
— Tony S. ⚡️ (@bitcoin) ⚡️ (@explorecryptony) February 27, 2019
Some users who wanted to exit their platform, however, have been dealt with minor blows. As per the terms of service, to close their account, users must have a balance of exactly zero and some users with very small amounts on their wallets have not been able to delete their accounts permanently. This has led to users helping each other out to even their wallets.
This whole fiasco with Coinbase surfaces a doubt if the traditional exchanges are actually safe and working for the benefit of people and their privacy. In the aftermaths of these events– peer to peer platforms like Paxful or Bisq may emerge as a better choice for private anonymous transactions compared to traditional central exchanges like Coinbase.