One of the largest cryptocurrency exchange of the United States, Coinbase, is selling Immigrations and Customs Enforcement (ICE) a suite of features used to track and identify cryptocurrency users —The Intercept reported.
According to a new contract document obtained by Jack Poulson, director of the watchdog group Tech Inquiry, and shared with The Intercept, — in August 2021, Coinbase sold a single analytics software license to ICE for $29,000. The documents show ICE now has access to a variety of forensic features provided through Coinbase Tracer, the company’s intelligence-gathering tool (formerly known as Coinbase Analytics).
Coinbase Tracer allows clients, in both government and the private sector, to trace transactions through the blockchain, a distributed ledger of transactions integral to cryptocurrency use. While blockchain ledgers are typically public, the enormous volume of data stored therein can make following the money from spender to recipient beyond difficult, if not impossible, without the aid of software tools. Coinbase markets Tracer for use in both corporate compliance and law enforcement investigations, touting its ability to “investigate illicit activities including money laundering and terrorist financing” and “connect [cryptocurrency] addresses to real-world entities.”—The Intercept noted.
According to the document which has been released via a Freedom of Information Act request, ICE is now able to track transactions made through nearly a dozen different digital currencies, including Bitcoin, Ether, and Tether.
Analytic features include “Multi-hop link Analysis for incoming and outgoing funds,” granting ICE insight into transfers of these currencies, as well as “Transaction demixing and shielded transaction analysis” aimed at thwarting methods some crypto users take to launder their funds or camouflage their transactions.
The contract also provides, provocatively, “Historical geo-tracking data,”. But it is unclear what exactly this data consists of or from where it’s sourced.
According to the Intercept, Coinbase spokesperson Natasha LaBranche, did not answer questions about how ICE is using Coinbase Tracer, but stated that “Coinbase Tracer sources its information from public sources and does not make use of Coinbase user data.”.
For the note, the Coinbase Tracer tool was developed by Neutrino, a blockchain-analysis firm that was acquired in order to create Coinbase Tracer, “was founded by three former employees of the Hacking Team, the Italian surveillance firm that develops spyware and hacking software and sells to governments.
Homeland Security Investigations, the division of ICE that purchased the Coinbase tool, is tasked not only with immigration-related matters, aiding migrant raids and deportation operations, but broader transnational crimes as well, including various forms of financial offenses. It’s unclear to what end ICE will be using Coinbase. The agency could not be immediately reached for comment, —The Intercept wrote.