If Coinbase’s blockchain monitoring or compliance tools indicate that some bitcoin transaction on its platform is suspicious, it’s reasonable to expect that the exchange has submitted a SAR. ICE can easily use the blockchain analysis tool to find suspects of what it deems “financial crimes,” and then check to see if Coinbase or other exchanges have submitted SARs on those users.
Coinbase may not directly share customer data with ICE, but they share customer data where required with FinCEN, which can share it with ICE. So it stands to reason that ICE is very much using the Coinbase tracing tool to help track and learn the identity of certain Coinbase customers.
You will not get a notice that your information is shared in a SAR. SARs are explicitly required to be secret. Exchanges and banks are prohibited from notifying you. Depressingly, as mandatory filings, none of this mass data collection requires a warrant.
Of course, the author has been a privacy advocate and Monero fanboy for quite a number of years -- so he had to get his digs in:
It’s almost impossible to kill these tools completely, but we can meaningfully reduce their surveillance scope by following Monero’s footsteps, for instance, of enabling sane privacy defaults across the board, not just for users of a niche tool.