On June 5, the Coinbase cryptocurrency exchange was criticized for its alleged efforts to sell cryptographic surveillance services to both the U.S. Drug Enforcement Administration and the Internal Revenue Service.

Since then, Coinbase representatives have made it clear that the company's analysis services do not share any personally identifiable information with law enforcement. They claim to get all the data from publicly available information.

Big Brother has been watching for almost a decade

Although Coinbase's denial may contain a grain of truth, a source who has worked with respect for crypto exchanges and Bitcoin ATM companies revealed that several government entities actively monitor users in almost all centralized exchanges and providers of guard cryptography services for years.

Speaking on condition of anonymity, this source said that crypto surveillance tactics date back to the early days of Bitcoin . They have said that these practices have become a much larger effort after the Mt. Gox Incident, in which 850,000 BTC have gone on the crypto-exchange once popular end of 2013.

Our source explained:

"I have worked for crypto exchanges, ATM Bitcoin companies , general crypto service providers, and more. They all engage in surveillance practices. They have no choice. “

When it comes to keeping tabs on users, they have said the US government preferred methodology is called a suspicious activity report, or SAR. Although SARs are common in most money transfer companies, crypto-SARs seem to operate according to different standards. They have said:

“In traditional institutions, a transaction must meet certain criteria in most cases to be considered suspicious. This is not really true for Bitcoin and other cryptocurrencies. As far as government is concerned, the threshold of "suspicion" is reached as soon as cryptocurrency is involved. "

They have developed:

“Custodian entities are legally required to deposit DAS for virtually any transaction related to [suspicious] cryptography greater than $ 5,000, regardless of user activity. Lots of files for lower amounts. Entities are legally prohibited from disclosing this reporting data to users or any member of the public. We cannot tell you that we have reported on you - never. And entities cannot refuse to comply with these reporting tactics because if they do, they will lose the licenses that allow them to operate. They can face fines or even prison terms. "

Who are they and what do they want to know?

When asked which agencies were most interested in users' cryptographic data, our source revealed that "reports are shared with FinCEN, the IRS, the FBI, various other federal law enforcement agencies." It covers the whole range. “

And it's not just the application of American laws:

“These are the United States, China, Japan, Russia, the United Kingdom, others I am sure; it depends on where you are based. But almost all the world powers have legally mandated methods of examining centralized user data. "

Our source also revealed that the information requested is fairly reliable. Agencies want to know:

"The coins you hold, the frequency of your exchanges, the initial source of all the funds used to buy cryptos, the amount of profits you have taken in a certain amount of time. They can and ask for everything. They also keep track of where your documents are sent once they have left the centralized custody. So if you keep your coins in a cold room, there is a good chance that an office in one or more governments of the world will know this wallet address. No matter where you move them, if a centralized exchange has already held these parts, they can follow you. "

Are you being watched?

So how do you know if you are one of the people who has been (or is currently) being watched by a government agency? This is a strangely simple question to answer, says our source: "If you have already filled out information on AML, chances are that data has been requested by someone." Monitoring crypto users is the whole point of AML and KYC. Why do you think places collect this information during registration? You are being watched. ”

Although the services cannot legally inform their users that they have   filed activity reports, there are apparently signs that people can watch:

"Accounts or funds frozen. If you had connection problems you are unable to access your account. Something like this probably means that you have been subjected to a suspicious activity report without your knowledge. Or a government entity may have requested information about you or your funds, in which case you may not be allowed to proceed until their review is complete. "

Can you avoid surveillance?

Blockchain participants operate in an industry largely based on the ideals of individual sovereignty and privacy. There are many projects in space that are working on creating decentralized variants of popular crypto service offerings. When it came to avoiding government surveillance requests from around the world, our source was clear:

“Decentralized exchanges and private rooms are the only answer I know of. Use centralized services at your own risk. "