Coinbase, the largest and most popular retail crypto exchange in the United States, is now working directly with the Secret Service and Internal Revenue Service (IRS) to de-anonymize the crypto space.
Specifically, Coinbase is now offering blockchain tracing services, and the Secret Service has signed a $50,000 contract with Coinbase, and the IRS has signed a $237,000 contract with Coinbase.
This of course raises the eyebrows of crypto users, since Coinbase has the full identification information for most of the crypto users in America, and therefore a logical conclusion is that Coinbase is readily handing over all of the identity information of users to the government.
Coinbase has claimed that the blockchain analytics services it’s offering to the government and the retail crypto exchange are completely separate aspects of its business. However, it is well known that Coinbase has already been handing over user identification information to the IRS and government agencies for years, since that is part of the crypto exchange compliance process.
Further, Coinbase CEO Brian Armstrong has tried to downplay the fears of crypto users by saying that blockchains are traceable whether his firm offers the service or not. In other words, Coinbase is saying if they didn’t help the government de-anonymize the crypto space someone else would. Basically, Coinbase is completely dodging the moral controversy surrounding this issue.
Zooming out, as discussed in a Crypto.IQ article from June, Coinbase is the ultimate honeypot for the crypto space. Coinbase is the most popular and easiest to use retail crypto exchange in the United States, and just about every American crypto user has used Coinbase at some point. This has given Coinbase the full identification info of basically every crypto user in the United States, and the government has been using this info for years to track crypto users. The only difference now is that Coinbase is openly profiting on its relationship with the government.
Thus, crypto users in the United States should think twice before using Coinbase, since using Coinbase will compromise their anonymity, and any crypto they buy there will be traced by the government.