A nonprofit that champions digital rights wants Coinbase to be more transparent in how it handles authorities’ requests for users’ private financial data.
- In a post on its website Wednesday, the Electronic Frontier Foundation (EFF) argued that the U.S.-based cryptocurrency exchange should begin releasing regular transparency reports.
- These should detail the number of government and law enforcement requests for information Coinbase receives and how it goes about dealing with those requests, the EFF said.
- Financial data is one of the "most sensitive types of information" a user produces, the group went on.
- Further, the EFF suggested that how Coinbase responds to government requests could "have a huge impact on what types of speech thrive online."
- Founded in 1990, the EFF is a nonprofit organization that sets out to defend "civil liberties in the digital world" by championing user's privacy, free expression and grassroots activism.
- Cryptocurrency exchanges should "especially understand" the importance of privacy, given their users tend to value censorship resistance and anonymity, the EFF said.
- Unlike Coinbase, Kraken, a rival U.S.-based crypto exchange, received high praise for its apparently transparent behavior around requests for information from government and law enforcement agencies.
- Kraken "already recognized the importance of being open on this topic," said the group, pointing to a tweet in January of a 2019 transparency report showing the U.S. topped the number of requests for information.
- Coinbase built its reputation as a reliable platform by stressing regulatory compliance from the start.
- In June, the exchange initiated procurement deals with a number of U.S. agencies, including the Drug Enforcement Administration and the Internal Revenue Service (IRS), for a cryptocurrency investigations tool called “Coinbase Analytics.”
- The tool enables tracing of transactions conducted across Coinbase, with the IRS claiming the tool possessed "capabilities that are not currently found in other tools on the market."
- At the time, Coinbase told CoinDesk the analytics data was "fully sourced from online, publicly-available data, and does not include any personally identifiable information for anyone."
- The exchange has made disclosures about how it would deal with requests for user data.
- In 2018, Coinbase told 13,000 customers it would share “only certain limited categories of information” following demands from the Internal Revenue Service, though it did not disclose precise details.
- It had previously tried to fight the tax agency's request for the information of 14,000 customers in a lengthy legal battle, but ultimately the court sided with the IRS.
- By releasing transparency reports, the EFF said Coinbase could "display leadership" and "fill in the gaps" of current knowledge "by simply shining a much-needed light on government requests for information."
- Coinbase declined to comment for this article.