Cambridge Analytica Set Eyes on Cryptocurrency Before Facebook Scandal

The political consultancy sought to promote a digital token that monetizes user data

by Marin Marinov
18 April • 3.5 min
In News

Cambridge Analytica (CA), the political consultancy behind the massive Facebook data breach scandal, was planning an initial coin offering (ICO) and its own cryptocurrency to finance the creation of a system that would help people store and sell their online personal data to advertisers, the New York Times and Reuters revealed on Wednesday.

The British company also attempted to promote secretly another group’s virtual currency, Dragon Coin (DRG).

Cambridge Analytica sought to raise USD 30 million in the ICO scheduled for the second part of 2017. The ICO tokens were then planned to become CA own cryptocurrency and be used for payments in the system. The ICO plan was led by CEO Alexander Nix and Brittany Kaiser, who left the company in February. Kaiser is the source of the New York Times investigation:

“Who knows more about the usage of personal data than Cambridge Analytica? So why not build a platform that reconstructs the way that works?” Kaiser was quoted by the US newspaper.

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Cambridge Analytica and cryptocurrency

 “Prior to the Facebook controversy, we were developing a suite of technologies to help individuals reclaim their personal data from corporate entities and to have full transparency and control over how their personal data are used. We were exploring multiple options for people to manage and monetize their personal data, including blockchain technology”, a Cambridge Analytica spokesman said in an email to Reuters without elaborating on their ICO plans

Cambridge Analytica had a cryptocurrency team that offered its services to numerous companies building cryptocurrencies, Brittany Kaiser reveals. Documents and emails, obtained by The New York Times, show CA involvement in DRG`s promotion behind the scene. The US newspaper links DRG to Macau “gangster Wan Kuok-koi, nicknamed Broken Tooth”. Dragon Coin`s ICO raised USD 320 million in March.

Today`s revelations mounted pressure on Cambridge Analytica. The British company is at the center of a Facebook data breach scandal after previous media investigations showed that CA gained improper access to more than 87 million accounts.  Cambridge Analytica used one of the social media quizzes that worked as embed application for profiling user information. CA, specialized in using different tactics to influence people political decisions, was hired by Donald Trump`s presidential campaign in 2016 and by the Vote Leave ahead of the Brexit referendum.

ICO and regulation

Kaiser`s most recent revelations about CA come in times of growing regulatory concerns about the crypto sector worldwide.

“Further complicating matters, many of these fundraising (activities) are dubious, if not downright frauds. The issuers escape the scrutiny of the police or securities regulators because of their cross-border nature and the way the crypto assets are structured to fall outside any regulator's perimeter,” deputy head of the Hong Kong Securities and Futures Commission (SFC) Julia Leung said last week in a speech before investors.

The US Securities and Exchange Commission (SEC) opened dozens of investigations into cryptocurrency startups in the last months.

ICO or the crypto version of initial public offering (IPO) is becoming a highly popular way to raise initial capital. More than 3000 ICOs raised USD 3 billion by the end of October 2017, according to Autonomous Research, part of the US Financial Industry Regulatory Authority. A recently published study of advisory company Satis Group claimed that around 80% of the initial coin offerings are scams.