Coinbase Secures Contract To Develop Software For U.S. Customs & Immigration Enforcement Agency


Written by Charles Thuo

Leading US crypto exchange, Coinbase, has secured a deal worth $1.36 million to develop software for the US Immigration and Customs Enforcement Agency. This is the second contract the firm has secured with the US government, the last being in August 2021.

The contract has been outlined specifically to provide “application development software as a service” for the US Immigration and Customs Enforcement (ICE) division of the Department of Homeland Security.

Coinbase has largely been in the US financial regulator’s good books, contrary to most other large exchanges like Binance, and Circle, that have had to deal with court cases especially from the SEC, due to their activities and products. This is seen as a great advantage for Coinbase when it comes to successfully competing for government contracts and winning some of them.

The contract, which was recently signed, came into effect on September 16 and saw Coinbase receive an initial sum of $455,000 from the Homeland Department. The contract is most likely to last up to three years and will see the crypto exchange receive an accumulated total of about $1.36 million.

The current contract is the second contract that Coinbase has secured with ICE; the first one being in August and involved providing “computer forensics services” to the Agency. The first contract was worth $30,000.

Backlash From The Crypto Community Following The News

Whilst it is a major win for Coinbase, the news elicited a backlash from the cryptocurrency community, most of whom believe that the compensation that Coinabse was receiving for its services was quite low, considering the scale of the operations being offered by Coinbase. Alex Gladstein, the chief strategy officer at Human Rights Foundation also indicated that the contracts exposed Coinbase to reputational risk.

“This isn’t very much money for Coinbase in the grand scheme of things. Strange that they would risk so much reputationally for such a relatively small sum,” said Gladstein.

At the same time, the news has also received criticism regarding Coinbase’s acquisition of the Italian blockchain analytics startup, Neutrino, in 2019. Before the acquisition, some people within the Neutrino team were part of a Hacking Team company, which reportedly helped authoritarian regimes spy on journalists. 

Neutrino’s CEO, for example, was the ex-COO of the Hacking Team and Neutrino’s CTO was also at the Hacking Team for 8 years. 

Neutrino was also implicated in several murder cases between 2013 and 2018, involving journalists in the Middle East.

However, in March 2019, Coinbase SEO Brian Armstrong, said that Neutrino staff who had prior connections to the Hacking Team Company, would retire from their roles after Neutrino was acquired by Coinbase.

Kraken CEO Jesse Powel, referred to the controversy surrounding the acquisition of Neutrino in a tweet, citing the reputation hit that Coinbase took at the time.

Coinbase’s Other Involvement With The US Government 

Since the acquisition of Neutrino, Coinbase has also won contracts with the US Secret Service, which were created  for the investigation of the use of cryptocurrencies for criminal purposes, starting in 2020. This was during the same time that the Secret Service announced the formation of the Cyber Fraud Task Force.




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