Coinbase released their second transparency report, covering the latter half of 2020. Transparency reports provide an overview of the information requests for customer data that Coinbase received from government agencies and law enforcement. Coinbase does however note that they are restricted from disclosing some of the information requests they receive.
The except below is from their inaugural transparency report, where Coinbase summarizes how they internally approach such requests for customer information:
As a financial institution with a duty to detect and prevent prohibited activity on its platform, we respect the legitimate interests of government authorities in pursuing bad actors who abuse others and our platform. Yet we will not hesitate to push back where appropriate, even when it is inconvenient or costly to do so. That’s why each request we receive is handled by a team of experienced specialists in accordance with set procedures to confirm the validity of the request and narrow or object to requests that are overly broad.
This transparency report is interesting as a standalone document, but I also wanted compare this information to their transparency report that covered the first half of 2020, along with how 2020 looked as a whole. I hope that Coinbase incorporates some type of historic trend information into their future reports.
Coinbase disclosed receiving a total of 4227 requests for customer information in 2020. A total of 2313 requests were received in the latter half of the year, up from 1914 received in the first half (~21% increase). Criminal inquires made up ~96% of the requests they received, which was consistent across 2020 (+/- ~0.5%).
For all of 2020, Coinbase disclosed receiving requests from 39 countries, with roughly 90% of all requests coming from the US (2310), UK (1038), and Germany (435). France and Spain round out the top five, both of which saw a large increase in the number of requests made between the first and second half of the year. Six countries only issued a request in the first half of 2020: Hungary (2), Greece, Latvia, Romania, Slovakia and Turkey. Five countries only issued a request in the second half of 2020: Japan (2), Monaco (2), Lithuania, New Zealand and Thailand.
For the United States, Coinbase also provided a breakdown of which agencies submitted law enforcement related requests. This portion of the transparency reports rely solely on agency acronyms, so I included a summary at the end that describes each agency.
The top three sources accounted for roughly 64% of the total number of requests. The FBI was slightly less than one-third of all requests, followed by Homeland Security (HSI) and state and local agencies. Other major contributors include the IRS, DEA, and DOJ. The biggest surprise to me was that the Food and Drug Administration (FDA) made an appearance as a named agency in both reports, though their contribution was minor (~0.5%). If cryptocurrency becomes more regulated, I anticipate there would be an increase in requests originating from agencies like the SEC and CFTC.
US Government Agency Acronyms
CFTC, Commodity Futures Trading Commission
Protects the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to fosters open, competitive, and financially sound futures and option markets. They investigate and prosecute commodities fraud, including foreign currency schemes, energy manipulation and hedge fund fraud, and works with other federal and state agencies to bring criminal and other actions.
DEA, Drug Enforcement Administration
Enforces the United States' controlled substance laws and regulations and aims to reduce the supply of and demand for such substances.
DOJ / USAO, Department of Justice / US Attorney's Office
Enforces federal laws, seeks just punishment for the guilty, and ensures the fair and impartial administration of justice.
FBI, Federal Bureau of Investigation
Enforces federal law, and investigates a variety of criminal activity including terrorism, cybercrime, white collar crimes, public corruption, civil rights violations, and other major crimes.
FDA, Food and Drug Administration
Responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics, and products that emit radiation. The FDA also provides accurate, science-based health information to the public.
HSI, Homeland Security
Works to improve the security of the United States. The Department's work includes customs, border, and immigration enforcement, emergency response to natural and manmade disasters, antiterrorism work, and cybersecurity.
ICE, Immigration and Customs Enforcement
Enforces federal laws governing border control, customs, trade, and immigration.
IRS, Internal Revenue Service
Administers and enforces U.S. federal tax laws.
SEC, Securities and Exchange Commission
Oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds in an effort to promote fair dealing, the disclosure of important market information, and to prevent fraud.
USPIS, US Postal Inspection Service
Supports and protects the U.S. Postal Service and its customers by enforcing the laws that defend the nation’s mail system from illegal or dangerous use.
USSS, US Secret Service
Safeguards the nation's financial infrastructure. The Secret Service is also responsible for protecting national leaders and visiting heads of state.
Both of the original reports are available on the Coinbase blog:
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