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Digital Rights Advocacy Group Calls On Coinbase for Greater Transparency

The EFF wants Coinbase to be more transparent in how it handles authorities' requests for users' private financial data.

Sep 3, 2020 at 8:01 a.m. UTC
Updated Sep 14, 2021 at 9:51 a.m. UTC

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.

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