U.S. Internal Revenue Service inks deal with Coinbase for blockchain analytics software
July 16, 2020, 10:33AM EDT
2 min read
Public records show that the U.S. Internal Revenue Service has inked a deal with crypto exchange company Coinbase to use its Coinbase Analytics blockchain tracing software.
The signing date is listed as July 15 on the Sam.gov database, which tracks contract offerings for U.S. agencies. The contract becomes effective on July 23 and lasts for a single year with an option to renew for a second year. Based on the contents of the public record, it appears that the IRS is paying Coinbase $124,950.00 for the single-year duration. The deal has yet to be added to USAspending.gov, a database that tracks completed contracts.
As The Block previously reported, the IRS was among a group of major U.S. agencies being sought by Coinbase as potential clients for its Analytics platform. The IRS had signaled its intention to buy a software license from Coinbase in April, noting in published documents that "[i]n addition to the Bitcoin Blockchain, Coinbase Analytics (fka Neutrino) allows for the analysis and tracking of cryptocurrency flows across multiple blockchains that criminals are currently using. Coinbase Analytics also provides some enhanced law enforcement sensitive capabilities that are not currently found in other tools on the market."
The Analytics platform arose from Coinbase's controversial acquisition of Neutrino, which, as previously reported, was founded by members of the Italian spyware company Hacking Team. In a July 11 tweet, Coinbase CEO Brian Armstrong acknowledged that the Neutrino acquisition "did not go very well honestly, and we had to cycle out some team members" but added that "we were able to rebuild the team, and set up this functionality in house."
He defended the Analytics offering, remarking that "[i]t's expensive to build this capability, and we want to recoup costs. There is an existing market for blockchain analytics software, so we sell it to a handful of folks as well. It also helps us build relationships with law enforcement which is important to growing crypto."
When news of Coinbase's efforts was first reported, the company stressed that "[t]he information offered in Coinbase Analytics has always been kept completely separate from Coinbase internal data."
Last week, The Block reported that Coinbase had contracted with the U.S. Secret Service to provide the agency with its analytics software.