US digital currency exchange Coinbase recently acquired a small-scale blockchain startup called Neutrino on Feb 19, and by doing so sparked concern and outcry in the blockchain community.

The reason: Neutrino was founded by three former members of Hacking Team, which had reportedly been caught in the past selling spyware to governments with questionable human rights behavior like Ethiopia, Sudan, and Saudi Arabia.

Francis Pouliot, co-founder of Canadian company Bull Bitcoin, bluntly tweeted that Hacking Team was a “pro-government mercenary hacker firm that gave Saudis tools/consulting to track/eliminate dissidents”.

Neutrino itself specializes in technology for enforcement and financial agencies to track and investigate blockchain transactions. It has claimed to not only be able to monitor the movement of Bitcoin, but even private coins that are harder to track, such as Monero. In 2017, Neutrino was the one to conclude that the North Korean hackers behind WannaCry attacks had converted their Bitcoin haul into Monero.

At the time of the acquisition, Coinbase wrote on its blog that Neutrino “will help us prevent theft of funds from peoples’ accounts, investigate ransomware attacks, and identify bad actors”. Neutrino is also “the best we’ve encountered in this space”.

If Neutrino’s abilities are to be believed, it is not entirely surprising why a crypto exchange may feel its skill set will come in handy. But fellow industry players have been feeling otherwise.

For example, Clovyr CEO and former JPMorgan Chase blockchain lead Amber Baldet explains, “When I said it would be great to have more infosec people involved in the crypto space, I didn’t mean the largest US exchange should acquire an analysis tools company run by a former Hacking Team member”.  

In response to the public backlash over the acquisition, Coinbase has come out to defend its position. Explaining in an email, Coinbase said it is “aware that Neutrino’s co-founders previously worked at Hacking Team, which we reviewed as part of our security, technical, and hiring diligence. Coinbase does not condone nor will it defend the actions of Hacking Team, but it was important for Coinbase to bring this function in-house to fully control and protect our customers’ data”.

Coinbase also emphasized “we know we can never take the trust our customers place in us for granted”.