Arkham Intelligence’s new marketplace for on-chain data was recently launched with mixed feelings from the community. While many amateur analysts were excited about the opportunity to monetize their on-chain investigations, others just frowned. As “doxx-to-earn” or “snitch-to-earn”, some of the privacy-conscious crypto-followers mocked the new platform. But the coup de grace was given by the blockchain analysis company itself.
As it became known a little later, Arkham had sloppily encrypted the recommendation links of its business partners and influencers, thereby revealing sensitive data. With little effort and the help of a simple decoding software the “referral links” could be decrypted in this way and revealed the e-mail addresses of the partners. In other words: The company, which advertises the sale of blockchain user data with its new platform, negligently reveals private information from its business partners. What irony, which immediately drew mockery and scorn – and raises questions.
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Data vs Crypto or “Doxx-to-earn”
The controversial business model of Arkham’s new platform sounds like a new version of a dark web marketplace. The Arkham Intel Exchange auctions off private data from crypto users, like whistleblowers once did tax evader CDs from Switzerland. The aim is not only to promote the disclosure of hedge funds and the clarification of scams, but in general the “buying and selling of information about the users behind any blockchain wallet addresses”, as is stated in their own blog is called. So basically, this could affect all actors, not just “malicious” ones.
In addition to the mocking remarks about yesterday’s data protection blunder, the community also had ethical concerns about the incentives of such a data exchange. “I cannot show support for services that involve buying or selling personal information or data,” one user wrote on Twitter. Others even suspected a conspiracy with US secret services behind the concept. Because Arkham’s financiers include Palantir Technologies, which works closely with the US government’s intelligence services.
Focus on Arkham’s practices
The events also raise questions about the analytics firm’s actual intentions. For successful auctions of user data, Arkham collects between 2.5 and 5 percent of the price as a fee. On the other hand, with the launch of the platform, the company launched its own token (ARKM) via a launchpad on Binance. So there are big profits to be had. However, questions about the decentralization of the platform remain unanswered, since each auction is checked and authenticated by Arkham before it is closed. So Arkham acts as an “all-knowing” middleman and could possibly use the collected analysis of its users for itself. It is even said that the terms and conditions state that Arkham collects data from its users.
Arkham’s negligent handling of sensitive information gives it an increasingly bad reputation. And makes some doubt their competence. According to its boss, Miguel Morel, the company had apparently known for a long time that the email addresses were not encrypted. The system should have been “changed beforehand”. Other incidents in recent months show that Arkham’s internal systems do not appear to be running smoothly. For example, when the firm’s on-chain software falsely reported large Bitcoin transactions to the US government, causing a crypto market flash crash.
Blockchain and privacy
Handling blockchain data is therefore associated with incalculable risks. It is difficult to predict what will happen when new financial incentives are added. However, Arkham and its CEO seem only partially aware of their responsibility. “We’re not perfect, but we always strive to do what’s best for our users,” Morel explained in a yesterday reaction to the criticism. If he has his way, his company is a savior and not a villain. Arkham empowers its users to unearth “malicious actors surviving in the dark,” according to Morel.
For the blockchain sector, the case is once again proof of the balancing act between the advertised transparency and the desired privacy. Unfortunately, the constant sovereignty of one’s own data is not given in this country either, as advocates of privacy coins repeatedly complain. The actually pseudonymous technology threatens to mutate into a dystopian surveillance instrument under false incentives. For users, the question arises as to whether they want to support one for financial reasons.
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