This newly signed contract marks the second cooperation between the United States government and Coinbase for software development, after the contracting back in August was successful.
Coinbase has signed an agreement with the United States Department of Homeland Security for $1.36 million where Coinbase has been contracted by the U.S. Immigration and Customs Enforcement division (ICE) to provide application software development services.
For this engagement that began on the 16th of September, Coinbase will be compensated for $455,000 for the services provided. Nonetheless, the contract encloses a 3-year extension possibility which will earn Coinbase a total of $1.36 million should their services remain essential to ICE.
The first contract between Coinbase and ICE back in August enclosed a provision of services related to computer forensics and the compensation amounted to $30,000.
The announcement has sparked outrage in the crypto community, with Human Rights Foundation chief strategy officer Alex Gladstein claiming that considering the magnitude of Coinbase’s activities and the reputation risk created by the relationship, the pay is quite low:
Like, this isn’t very much money for Coinbase in the grand scheme of things.
Strange that they would risk so much reputationally for such a relatively small sum.
— Alex Gladstein 🌋 ⚡ (@gladstein) September 18, 2021
This development has also risen backlash referring to the acquisition of Neutrino, the blockchain analytics startup by Coinbase in 2019.
Related: Head of Capital Markets Resigns from Coinbase
The biggest revelation of 2019 was that Neutrino staff was composed of a hacker group facilitating spying on journalists and dissidents for countries with authoritarian regimes.
Giancarlo Russo, Neutrino’s CEO, was once the COO of the Hacking Team, and Alberto Ornaghi, the company’s CTO, had worked there for almost 8 years.
The Washington Post claimed that between 2013 and 2018, the company was alleged to be involved in the murders of numerous journalists in the Middle East.
Neutrino employees with former ties to the infamous group Hacking Team would transfer out of their new roles at Coinbase in March 2019, according to Coinbase CEO Brian Armstrong.
Jesse Powell, Kraken CEO also had something to say about the recent contract between ICE and Coinbase:
Even more bizarre is the acquisition they made and reputational hit they took to be able to offer this service to the government. https://t.co/7VMpF66pYd
— Jesse Powell (@jespow) September 19, 2021
Coinbase has also signed contracts with the US Secret Service, which confirmed the formation of a Cyber Fraud Task Force in July 2020, since the acquisition of Neutrino.
The task force was tasked with looking into the usage of Bitcoin for illegal reasons, and later that same year, it stated that cryptocurrency provides many loopholes for rogue organizations and states to find ways around being subjected to international sanctions, as well as undermining the significance of traditional financial markets, which is why the interests of the United States and global allies may be harmed.
Coinbase is now mired in a regulatory battle with the Securities and Exchange Commission, which has taken issue with the company’s proposed stablecoin lending product and threatened to sue it.
Also read: Binance Under Investigation from the US for Potential Market Manipulation and Insider Trading