Chainalysis Into Recovery Mode Amid Data Selling Accustaions

Chainalysis, a well-known blockchain, defend and crypto surveillance firm which offers it market tracking tools and services to various exchanges has come out with a detailed article trying to defend its service and tell the world how their operations do not include user identification data.

However, the timing of the clarifications has made things more skeptical for the forensic firm who offer its services to exchanges including Coinbase. the articles look an unofficial address to the raging controversy over Coinbase admission that they are selling user data.

Elliptic, another firm which has been accused of tracking user funds and selling the data also came under scrutiny in recent times. Chainalysis provides market monitoring services to major exchanges like coinbase and Circlepay.

Chainalysis, the Cambridge Analytica of the Crypto World

Surveillance of any form without the consent is unethical and the use of surveillance firms by crypto exchanges make it even worse, given it violates the basic principle of cryptocurrencies. Remember the Cambridge Analytica controversy of Facebook, where Facebook sold the precious user data to the highest bidder which is also speculated to have an impact on the US Presidential elections.

Similarly, in the crypto world, the use of surveillance firms like chainalysis is a cause of worry for many cryptoanalysts. The pretext of using such services are given to be the tracking of illegal funds or money laundering, however, it’s funny how these surveillance firm turns out to be an absolute waste when it comes to the tracking of lost funds in the hacks on exchanges.

The same pattern is quite clear in the article published by the chainalysis defending itself. While saying that they don’t use any of the user’s identification, it does not clear whether it did sell the transaction data to the highest bidder down the line.

How Did It Begin?

It all started with the controversial acquisition of Neutrino, another forensic service provider by the Coinbase. The head of the sales, Christine Sandler admitted that the surveillance company which the coinbase has partnered before the latest acquisition was selling the user data to the third-party. He further explained,

‘It was really important for us to migrate away from our current providers […] [They] were actually selling client data to outside sources, and it was compelling for us to […] get control over that, and have proprietary technology that we could leverage to keep the data safe and protect our clients.”

Chainalysis timing of the response, make the community more critical towards the use of surveillance tools by the exchanges. Even though Coinbase quite clearly said that the service provider was selling their user data, Chainalysis tried to dunk the question through the technicality jargon and not answering the main questions over the accusation.