Coinbase already UNDER FIRE gets gas thrown onto the flames - inside the past few days of a public relations nightmare...

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Coinbase is quickly learning that the power and influence that earned them an $8 billion valuation also comes with people watching every move they make, and listening closely to every word they say.

Lately, a lot of people really don't like what they've been seeing and hearing.

If you need to catch up on things, the summary is - they purchased a company called Neutrino, which was founded by a man named Giancarlo Russo.  There's nothing sinister specifically about Neutrino, or Coinbase's reason for doing business with them - they make analytics software, Coinbase was looking to upgrade theirs.

The problem is - this isn't the only company its founder created, he's also behind the infamous 'Hacking Team' which is accused of everything from helping the US government spy on its citizens, to supplying other countries with spyware they used to arrest journalists and political protestors.

To make matters worse, with the backlash from that still growing - one of their own employees threw gasoline on the fire.

Christine Sandler, Coinbase’s director of institutional sales made a failed attempt at spinning things into a story about how much they care about privacy. Speaking to Cheddar, she said the whole reason they needed new analytics software is that the old provider was“selling client data to outside sources" - opening up a whole new scandal on top of the current one.

No surprise - people didn't hear it how she imagined they would, and Coinbase now says she simply misspoke - client data was never sold by or even supplied to the previous provider.

One of the perks of being headquartered in Silicon Valley and attending way too many conferences and meetups are the people I've been able to become friends with, many happen to be from various companies in the cryptocurrency or general tech industry. Hopefully, I earn their trust by covering their companies honestly, even when they screw up.

This is how I've been fortunate enough to build a decent list of sources, including several inside Coinbase. One of them is ranked pretty high up on the corporate ladder and in a position that effects decision making and policy within the company.

I wanted to understand how they got here to begin with, beyond the official public statements. Usually, I get a 'no comment' back from this particular source - but this time they had a lot to say:

"I agree with some of the critics here and so does [the CEO] Brian. I would never tell a journalist what to say but I reply to you because you've been fair.  In the interest of being fair don't you think it's dishonest to be angry at us but is still be using Google or Facebook?   I see your publication has links to a Facebook page on your homepage and I assume like most people you use Google for searches, do you not? 

Humor me for a minute - what recently came to light over at Google? They were building AI [artificial intelligence] to make military drones better at spying. It took a revolt from low-level employees to stop it, but what that means is their leadership was all for it.

There's a whole other Google for christ sakes, one where apparently the Chinese government has never been criticized on the entire internet, no matter how hard you search for it. Is every company that uses Google services evil now? Or can they separate something like purchasing cloud services from helping China censor their citizens? 

Facebook was even building a tool that would have given the Chinese government the power to censor any post they don't like. It still didn't satisfy the Chinese government enough to let them in so they spun it like they dumped China to stand up for free speech, but that isn't what happened. 

Facebook also says their AI scans your private messages for things to 'flag' for review, do you know what those things are? I don't.

My point is this: Coinbase already holds itself to a standard above other companies that our critics use on a daily basis, some tweets that were directed at us frankly make no sense when you include this fact."

To be fair - all this is true, and valid to bring up - but only for some perspective on the issue as a whole. But two wrongs don't make a right -  so I asked what is the actual company philsophy? How did this all go down to begin with?

"Remember this is a company started by a guy who also has a *separate* company [hacking team], that separate company is the one accused of doing some bad stuff.  Right off the bat notice how far removed Coinbase is here.  We didn't know the extent of the things they were accused of, and you can be sure we'll be doing deep research from here on out before any other acquisitions.

We were focused on was answering: does the software work? Testing it was the focus of our research.

The craziest tweets I saw basically were saying 'Coinbase has put their security at risk' a conspiracy theory that the software could contain spyware. Let me add and emphasize - WE OWN THE COMPANY AND THE SOURCE CODE. To imply we wouldn't notice spyware built into it is downright dishonest. Please put that in bold, it's the most important takeaway here for your readers.

Even with these fears being unfounded we announced today that we're letting go of all employees who were working at Neutrino before we acquired it. All we wanted was the tech and our team is capable of keeping it up to date from here.

 Trust me when I say we never imagined Coinbase's name thrown into articles about international 'black ops' and 'government spying' when looking into analytic software solutions.

All I'm saying is think big picture. Coinbase participated in none of the acts people are against - it was guilt by association, and we've ended that association."

I think what we're seeing here absolutely is a double standard - but it's one I'm glad we have. We're aware some tech giants have done a lot wrong and we don't want to see crypto go down the same path.

So, while I cannot support Coinbase's initial decisions I can applaud how they handled it in the end. As mentioned above, the complete statement from CEO Brian Armstrong says:

"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"

In closing I just want to say - I love that the cryptocurrency world is like this.  I love that Coinbase doing business with people who violate free speech was enough to unite us in disapproval, and I love that Coinbase basically said 'you're right' and took action.

Something just rubs us the wrong way when we hear of governments restricting it's citizens basic rights like free speech.  I don't know exactly what to call it, and I don't know many people I'd describe as 'political activists' in crypto - but there are some lines you just don't cross.

Whatever this is called, let's never stop doing it.

Author: Ross Davis
E-Mail: Twitter:@RossFM
San Francisco News Desk

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