Coinbase Tracer, the analytics arm of the cryptocurrency exchange Coinbase, has signed a contract with U.S. Immigrations and Customs Enforcement that would allow the agency access to a variety of features and data caches, including “historical geo tracking data.”
Coinbase Tracer, according to the website, is for governments, crypto businesses, and financial institutions. It allows these clients the ability to trace transactions within the blockchain. It is also used to “investigate illicit activities including money laundering and terrorist financing” and “screen risky crypto transactions to ensure regulatory compliance.”
The deal was originally signed September 2021, but the contract was only now obtained by watchdog group Tech Inquiry. The deal was made for a maximum amount of $1.37 million, and we knew at the time that this was a three year contract for Coinbase’s analytic software. The now revealed contract allows us to look more into what this deal entails.
This deal will allow ICE to track transactions made through twelve different currencies, including Ethereum, Tether, and Bitcoin. Other features include “Transaction demixing and shielded transaction analysis,” which appears to be aimed at preventing users from laundering funds or hiding transactions. Another feature is the ability to “Multi-hop link analysis for incoming and outgoing funds” which would give ICE insight into the transfer of the currencies. The most mysterious one is access to “historical geo tracking data,” and ICE gave a little insight into how this tool may be used.
“The contract provides a tool that supplements an HSI [Homeland Security Investigations] capability to investigative traffickers of deadly opioids on the dark web and cyber criminals who seek to attack critical infrastructure,” an ICE spokesperson wrote in an email to Gizmodo. “This tool does not reveal any sensitive personally identifiable information, is only referenced in criminal investigations, and it is not utilized in civil immigration enforcement. Furthermore, the contract complies with applicable laws, policies, and regulations that govern data collection and tracking.”
This is not the first time Coinbase has made a deal with government agencies. In August 2021, Coinbase signed a contract with ICE to provide the agency with licenses for their analytics software, but that contract was worth $29,000. And in April 2021, Coinbase sold the license from Coinbase Tracer to the Secret Service for under $50,000. A similar deal was done the year before that in May 2020.
Regarding the deal with ICE, Coinbase directed Gizmodo to the following tweet that was posted on June 30.
A representave for Coinbase also denied that the information to be provided by the analytic software is the exchange of customer data.
“All Coinbase Tracer features use data that is fully sourced from online, publicly available data,” the spokesperson told Coindesk, “And do not include any personally identifiable information for anyone, or any proprietary Coinbase user data.”
Update 6/30/2022, 6:10 p.m ET, This post has been updated to include a tweet from Coinbase.
Update 7/01/2022, 4:50 p.m ET, This post has been updated to include a statement from ICE.