We recently announced the acquisition of Neutrino, a blockchain analytics company. I’d like to share a bit of the back story on this acquisition, and a decision we’ve made going forward.
Our mission as a company is to create an open financial system for the world. To do this, the first step is to empower as many people as possible to get access to cryptocurrency. Since most of the money in the world is tied up in the traditional financial system, this means we need to connect to that system, and be compliant with all laws and regulations as a financial service business. Any cryptocurrency exchange that touches the banking system must implement a know-your-customer (KYC) and anti-money-laundering (AML) program, and a key part of those programs is blockchain analytics.
Until recently, we worked with several outside vendors that provide blockchain analytics, as most exchanges do. However, they didn’t support all the assets we wanted to have on our platform, so we knew at some point that we would need to bring this capability in house. We examined the players, found that Neutrino had some of the best technology in this area, and decided to acquire them.
However, we had a gap in our diligence process. 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. We took some time to dig further into this over the past week, and together with the Neutrino team have come to an agreement: those who previously worked at Hacking Team (despite the fact that they have no current affiliation with Hacking Team), will transition out of Coinbase. This was not an easy decision, but their prior work does present a conflict with our mission. We are thankful to the Neutrino team for engaging with us on this outcome.
Bitcoin — and crypto more generally — is about the rights of the individual and about the technological protection of civil liberties. Coinbase seeks to be the most secure, trusted, and legally compliant bridge to cryptocurrency. We sometimes need to make practical tradeoffs to run a modern, regulated exchange, but we did not make the right tradeoff in this specific case. We will fix it and find another way to serve our customers while complying with the law.
Living up to our values and the Neutrino acquisition was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.