Coinbase Faces $20M Extortion Attempt, Bitcoin Outflows Hit $1B

On May 15, it was revealed that Coinbase, the world’s third-largest cryptocurrency exchange, was targeted in a $20 million extortion attempt. Cybercriminals recruited overseas support agents to leak user data for social engineering scams. Despite the attack, investor sentiment remained optimistic, with the Fear & Greed Index staying firmly in the “Greed” zone above 69. The expected remediation and reimbursement expenses for Coinbase range from $180 million to $400 million, as the exchange pledged to repay all phishing attack victims. Less than 1% of Coinbase’s active monthly users were reportedly affected by the attack.

Coinbase faced a significant challenge as a group of external actors bribed and coordinated with several customer support contractors to access internal systems and steal limited user account data. The attackers attempted to extort $20 million worth of Bitcoin from Coinbase in exchange for not disclosing the breach. Coinbase refused the demand and instead offered a $20 million reward for information leading to the arrest and conviction of those responsible for the scheme. No passwords, private keys, funds, or Coinbase Prime accounts were affected by the attack.

Despite the security breach, institutional demand for Bitcoin continued to grow. On May 9, Coinbase recorded its highest daily outflows of Bitcoin in 2025, with 9,739 Bitcoin, worth more than $1 billion, withdrawn from the exchange. This outflow occurred as Bitcoin traded above $103,600 and just days after the White House announced a 90-day reduction in reciprocal tariffs between the US and China, easing market concerns and lifting broader investor sentiment. The 90-day suspension of additional tariffs removed the risk of “sudden re-escalation,” which may help Bitcoin, altcoins, and the wider stock market rally due to improved risk appetite.

In other news, Aave, a decentralized finance (DeFi) protocol, reached a new record of funds onchain, with a total value locked (TVL) of $40.3 billion on May 12. Aave is a DeFi lending protocol that lets users borrow cryptocurrency by depositing other types of cryptocurrency as collateral. Meanwhile, lenders earn yield from borrowers. TVL represents the total value of cryptocurrency deposited into a protocol’s smart contracts. With these milestones, Aave is proving its dominance in the lending space.

Additionally, the US Securities and Exchange Commission (SEC) pushed back its decision on a proposed spot Solana exchange-traded fund (ETF). The decision came the week after the SEC delayed its ruling on Canary Capital’s Litecoin (LTC) ETF. Spot ETFs are key drivers of liquidity and institutional adoption for digital assets. For Bitcoin, the US spot Bitcoin ETFs accounted for an estimated 75% of new investment after launching, which helped BTC recapture the $50,000 mark in February 2024, a month after the ETFs debuted for trading. While a Solana ETF may generate only a fraction of the inflows of Bitcoin ETFs, it could increase Solana’s institutional adoption in the long term by offering investors a “regulated investment vehicle” that may still attract billions of dollars in capital.

Starknet, an Ethereum layer-2 scaling platform, reached a decentralization milestone laid out by Ethereum co-founder Vitalik Buterin and is now the largest zero-knowledge rollup-based network by total value locked. Starknet said it has hit “Stage 1” decentralization, according to a framework Buterin laid out in 2022, which means the network operates with limited oversight or “training wheels.” Starknet is now the only layer-2 ZK-rollup network to have reached Stage 1 and has grown to be the largest ZK-rollup blockchain with a total value locked of $629 million, just ahead of ZKsync’s $610 million.

According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the green. Solana-based memecoin Dogwifhat (WIF) rose over 43% as the week’s biggest gainer, followed by decentralized exchange Raydium’s (RAY) token, up nearly 19% over the past week. The total value locked in DeFi continues to grow, reflecting the increasing adoption and interest in decentralized finance protocols.