Coinbase Data Breach Exposes 100,000 Customers, Faces $400M Lawsuit

In a significant cybersecurity incident, Coinbase Global Inc. confirmed that personal information of its customers, including names, addresses, emails, and government-issued identity documents, was stolen. The breach, which involved rogue contractors, also exposed the last four digits of social security numbers, partial bank-account numbers, and images of government IDs. The hackers demanded a $20 million ransom in Bitcoin, adding to the complexity of the situation. The incident has led to a class-action lawsuit against Coinbase, with potential damages amounting to $400 million.

Among the affected customers was Roelof Botha, a managing partner at Sequoia Capital. Botha's personal information was compromised as part of the broader data breach. The hackers are alleged to have used the stolen information to conduct social engineering attacks, impersonating Coinbase customer support to deceive customers. This incident highlights the vulnerabilities in centralized exchanges and the potential risks associated with storing sensitive personal information.

Coinbase has disclosed that it is cooperating with a U.S. Securities and Exchange Commission (SEC) investigation into how it reported its user metrics in past disclosures. The exchange has also confirmed that it is facing legal action and potential financial losses due to the breach. The incident has raised concerns about the security measures in place at major cryptocurrency exchanges and the potential for similar attacks in the future.

The breach has significant implications for the cryptocurrency industry, as it underscores the need for enhanced security protocols and better protection of customer data. The incident serves as a reminder that even leading exchanges are not immune to cyber threats and that continuous vigilance is required to safeguard against such attacks. The fallout from this breach is likely to have long-lasting effects on the industry, as regulators and customers alike demand greater transparency and accountability from cryptocurrency exchanges.

Attackers accessed some account information about Roelof Botha. Outsiders bribed Coinbase workers, tried extorting crypto firm. Personal information about Botha, including his phone number, address and other details associated with his Coinbase account, were stolen. Coinbase on Thursday revealed that attackers had bribed customer service representatives in India with cash in exchange for access to client data. The thieves then demanded $20 million from Coinbase in exchange for covering up the incident, an extortion demand the company refused to pay. Coinbase began noticing unusual activity from some customer service representatives as far back as January.

That the attackers gathered information about Botha, which has not been previously reported, hints at the type of wealthy and powerful targets that the outsiders were looking to compromise. Botha is a member of the so-called PayPal Mafia, an influential group of former PayPal employees that includes Peter Thiel and Elon Musk. He joined Sequoia, one of the world’s foremost venture firms, in 2003, placing early bets on companies like YouTube and Instagram. He became the firm’s leader, taking the title of senior steward, in 2022.

Some customers last weekend received alerts from Coinbase suggesting that their information had been improperly accessed. The safety of crypto executives has become a topic of concern as the sector has become more visible. France’s interior ministry assembled a group of executives on Friday to explain immediate steps the country is taking to end a wave of kidnappings that’s targeted industry leaders. Those measures will include special checkups at the homes of crypto executives and specific briefings to them and their families.

The meeting comes after the daughter and grandson of chief executive officer of Paymium, a virtual currency exchange, were the targets of a failed kidnapping that took place in broad daylight in Paris. Before that, the father of another man made rich from cryptocurrency was taken, then freed two days later.