Big Brother, I mean Coinbase....

It has been known for a while now that Coinbase actively engages in espionage against its user base. That said if you are dependent upon Coinbase to purchase Bitcoins; don’t. As any and I mean any purchase that they don’t like will get you arbitrarily perma-banned from using their exchange.

https://www.cryptocoinsnews.com/coinbase-bringing-big-brother-bitcoin-accounts/
https://www.dailydot.com/layer8/coinbase-bitcion-dark-net-researcher/
http://www.freebitcoingiveaway.co.uk/coinbase-spying/
https://www.naturalnews.com/049745_Bitcoin_privacy_government_surveillance_Coinbase.html

Additionally any purchase you make with your BTC is undoubtedly logged into a database somewhere and stored for later use or to be turned over to government entities.

Personally I find the idea of Big Brother (I mean Coinbase) spying on my financial activities to be somewhat disturbing. I also find it to be a very draconian practice that serves to lessen not increase user confidence.

Imagine if you will that you went to your local bank and withdrew some cash. You then made the choice to go to Vegas and have some fun. Imagine your surprise if shortly thereafter your bank notifies you that your account has been closed, and the funds would be on hold for an amount of time of their choosing as the serial numbers on the money you withdrew were deposited to an account in Las Vegas.

This is essentially what Coinbase does, it determines whether or not it is happy with your purchase decision. It also actively logs all addresses you use and determines who owns the destination address.

I equate them to a really creepy girlfriend that logs into your social media accounts on her phone without your knowledge to track every message you send and receive.

In my personal experiments using a few Bitcoin selling sites, Coinbase has proven to be exceptionally thorough at tracking multiple hops and even currency swaps with new address generation. So if you buy BTC from Coinbase, send to your wallet, then send somewhere they don’t like… Busted.. If you buy BTC from Coinbase, send to another exchange, trade there and then send somewhere they don’t like… Busted.. If you swap between currencies say move LTC off Coinbase, convert to BTC on another exchange, then send somewhere they don’t like.. Busted…

Coinbase knows if you are using Kraken, Bittrex, Genesis or any other exchange. It logs your activities and stores them in its system. This I know after speaking with them in regards to a test account wherein the support representative was able to associate destination addresses with, and list by name exchanges and companies that received BTC purchased with that account several hops down the chain.

Of equal interest is the fact that a low level tech support staffer can quickly see where you have been sending your BTC. Hmm.. I wonder if that information is marketable to those with a nefarious curiosity about wallets with substantial holdings or transactions on Coinbase.

I don’t think it would be too much of a leap to imagine an underpaid support person accepting a sum of money in order to provide company names or other stored information associated with the destination addresses of a particular or many, many BTC address(s) to which Coinbase holds the private keys. This information could then be used to create a profile, look for commonalities and begin unearthing a users real world identity for targeting as a potential victim.

Sound farfetched? Not so.. Let’s say an individual successfully identified a high value BTC holder after obtaining the information on spending habits and company names stored by Coinbase associated with a specific address. This individual can then ambush the now identified account holder at a place of their choosing. Perhaps he puts a gun to their head as proper motivation to transfer their coin away..

While this scenario is somewhat fantastic; it could happen as the information about what you spend and where you send your BTC is readily available to even the lowest level rank and file employees of Coinbase phone support.

Although I doubt it would even be that difficult as this same low level employee has access to all of the personal information you gladly handed over when agreeing to use their site. Little things like your name, address, your BTC holdings and what you like to spend them on. This really sounds like information the government enjoys snooping in on.

Imagine if you buy some BTC, send to a relative or friend and they in turn buy something from an address Coinbase doesn’t like. That’s Right…. Winner Winner Chicken Dinner… You get your account closed for activities totally unrelated to you.

I find it very sad that in this great country I am not able to purchase a commodity and then use it how I please having taken ownership of the commodity through my initial purchase.

Even more disturbing is that it has been alleged that Coinbase has contacted local law enforcement on users that sent BTC to addresses they did not like.
https://www.reddit.com/r/Bitcoin/comments/34yvtf/coinbase_is_behaving_like_big_brothermonitoring/

It is my opinion that Coinbase needs to A) Be considerably more transparent in regards to what user information they are tracking and storing B) stop spying on the purchase activities of individuals that have taken ownership of a commodity and governing what they then choose to do with it.