Coinbase, a major US cryptocurrency exchange and wallet provider, came under scrutiny for its acquisition of Neutrino, a firm where some of its employees had connections to controversial software firm Hacking Team—a platform used by authoritarian governments to spy on their citizens. In response, on Mar. 4th, CEO Brian Armstrong made a decision to lay off those employees.
Coinbase Responds to Public Outcry by Firing Former Neutrino Employees
After weeks of continuous debate about the company’s acquisition of blockchain analytics company Neutrino Coinbase has just now issued an official response.
According to Armstrong, employees of Neutrino who had previously worked at the controversial computer surveillance software company in Italy, Hacking Team, would be asked to transition out of Coinbase. He further noted:
“While we looked hard at the technology and security of the Neutrino product, we did not properly evaluate everything from the perspective of our mission and values as a crypto company.”
He added that the decision was made together with the Neutrino team and that the transition will be made on good terms. Armstrong said that overlooking the connections Neutrino employees had with controversial software company Hacking Team was a result of a gap in their due diligence process.
Coinbase failed to mention exactly when the Hacking Team employees transition out of Coinbase and where will they transition to. It’s also possible they could transition into an ‘unlinked’ subsidiary and continue to interact with Coinbase, according to some community members.
Letting go of star employees after a controversial acquisition can be painful and economically unviable. Thus, the question—whether Coinbase is looking to fire those employees or use a loophole to keep them within the company’s sphere of influence?
Moreover, the reputation of Coinbase has come under scrutiny from the listing of Ripple’s XRP on its platform. Some have even suggested the company accepted a large listing fee to add XRP to the exchange.
Connection Between Neutrino and Hacking Team Could Harm Coinbase’s Reputation
After Coinbase acquired Neutrino last month, many experts raised questions about the latter’s connections with a notorious IT company. BreakerMag’s David Z. Morris was among the first to point out that the founders of Neutrino also founded Hacking Team, an Italian software company whose platform was used by authoritarian governments to spy on their citizens.
Back in 2016, a Reporters Without Borders paper identified Hacking Team as one of five “corporate enemies of the Internet.” The report found that Hacking Team cooperated with governments of Sudan and Morocco enabling them to “commit violations of human rights and freedom of information.” The Washington Post found that the company worked with a Saudi Arabian enforcement unit that was involved with the murder of the renowned journalist—Jamal Khashoggi.
Based on these factors, the backlash Coinbase faced after it announced the acquisition wasn’t surprising. A #DeleteCoinbase movement gained traction on Twitter with hundreds of users pledging to withdraw their funds and delete their Coinbase accounts following the negative publicity. However, it seems unlikely that a meaningful number of users will boycott Coinbase over the issue.
As one of the most trusted crypto asset custodian in the US, an association with such a company as notorious as Hacking Team could significantly impact Coinbase’s reputation. We are yet to see how this incident will affect the company in the long run, but for now, it seems that the PR storm is fading.Posted In: Coinbase, San Francisco, Crypto Exchanges, Hacks