Across the wires and neurons that make up the distributed intelligence known as Crypto Twitter, users of the Coinbase cryptocurrency exchange are closing their accounts in protest, and sharing screenshots. It’s reminiscent of previous movements to #DeleteFacebook and #DeleteUber. Much like those campaigns, it is driven by a growing sense that the largest crypto exchange in the U.S. has lost its moral compass and can’t be trusted to be a responsible steward of customer funds and data.
— SylTi (@SylTilt) February 28, 2019
— David Coen ⚡[WTF is "the Blockchain"?] (@thedavidcoen) February 28, 2019
The idea and hashtag began picking up steam more than a week ago, when early spotters voiced concerns about Coinbase’s acquisition of the analytics company Neutrino. But it truly went viral yesterday, largely at the urging of independent developer and bitcoin booster Udi Wertheimer.
Not that I’m @coinbase’s biggest customer by any stretch of the imagination, but I’m done.
— Udi Timechainheimer (@udiWertheimer) February 27, 2019
But why all the anger? Three controversial moves this month helped bring distrust of Coinbase to a head.
Putting Keys in the Cloud
On February 12, Coinbase announced that its Coinbase Wallet would allow users to store their private cryptocurrency keys to Google Drive and iCloud. Though the keys are encrypted in a way that Coinbase says is secure, the crypto community raised serious concerns. Many felt that a cloud backup solution was inherently risky, and that the feature was, in the words of Kraken CEO Jesse Powell, “training users on bad security.”
Enlisting in the XRP Army
On February 25, Coinbase announced that it would allow users of its Coinbase Pro service to buy XRP, the cryptocurrency behind aspiring bank-transmission provider Ripple. XRP is controversial in the broader cryptocurrency community, with critics alleging that it is centrally controlled. From that viewpoint, the choice to list XRP means Coinbase is prioritizing the chance to earn fees from buyers over higher principles. XRP’s regulatory status is also murky, with many arguing in recent years that the creation and distribution of the currency make it an unregistered security, and potentially subject to future SEC action.
Of course, Coinbase wasn’t universally criticized for listing XRP. Ripple supporters were elated at the news, and even more neutral voices have argued that an exchange giving its customers access to an asset isn’t the same as endorsing or approving of it.
Welcoming Hacking Team to the Family
The biggest impetus behind #DeleteCoinbase, though, was the announcement on February 19 that Coinbase had acquired a blockchain analytics firm called Neutrino. As we detailed yesterday, Neutrino shares most of its leadership with Hacking Team, an Italian spyware firm that helped oppressive regimes worldwide monitor political dissidents and journalists. In several cases, Hacking Team’s work appears to have led to the imprisonment and even murder of pro-democracy activists—and some of its leaders seem to have had no moral qualms about silencing dissent.
As investor and political theorist Nic Carter spelled out, such actions are deeply contrary to the core values of freedom and privacy that drew many users to cryptocurrency in the first place. While their cloud-keys service and XRP listing elicited mixed reactions, Coinbase’s relationship with the former Hacking Team generated near-universal shock and scorn.
Bitcoin is anti-authoritarian tech. Hacking team supports unbridled authoritarianism & surveillance panopticapitalism
— nic carter (@nic__carter) February 27, 2019
As those details began to spread, Wertheimer issued his call to arms. According to data gathered by social media analyst Geoff Golberg (and visualized below), Wertheimer became the center of gravity for the broader discussion.
Wertheimer also set in motion a solution to an obstacle faced by some users who wanted to close their accounts. Tiny amounts of cryptocurrency, often known as “dust,” were reportedly preventing some users from leaving Coinbase, because they were too small to transfer out, but the exchange doesn’t allow closure of accounts with remaining balances.
Taking obvious inspiration from the Lightning Torch/Lightning Trust Chain, Wertheimer proposed a solution that he called the #DeleteCoinbaseTrustChain. Because Coinbase allows free transfers between existing accounts, users could simply transfer their “dust” to another Coinbase user, then close their account.
I've deleted all my coinbase affiliate links from @freedomnodecom, donated my leftover balance (not much) to @btcven and deleted the account. You should #DeleteCoinbase too. If you want to make it more fun join the #DeleteCoinbaseTrustChain pic.twitter.com/Ect2skbWqV
— Mario Dian ⚡️ (@mariodian) February 28, 2019
For now, it’s hard to gauge how many users are actually leaving Coinbase. The exchange has tens of millions of users, so it’s tempting to dismiss the outrage of a few thousand insiders on Twitter as irrelevant. But recent history shows that ignoring #DeleteCoinbase would be a mistake.
When the #DeleteUber hashtag took off in January 2017, the ride-hailing app had far more users than Coinbase does now, while serving a far less ideologically committed audience. And while Uber’s corporate culture had generated a critical mass of ill will beforehand, the actual inciting incident—a local Uber unit’s decision to control prices during a protest of Donald Trump’s Muslim travel ban—was more a misunderstanding than a moral failure.
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Yet the movement catalyzed discontent so effectively that Uber lost an estimated 200,000 riders. Uber competitor Lyft got a major boost to growth, at least for a time, and the storm arguably contributed to the resignation, six months later, of Uber founder and CEO Travis Kalanick.
It remains to be seen whether Coinbase’s controversial moves—particularly its acquisition of the former Hacking Team—ultimately undermine the trust of users enough to impact its bottom line or shake up its leadership. But swarms of angry people on Twitter have certainly accomplished much bigger things with much less committed leaders.