Coinbase Faces Backlash After Employee Leaks Data, Users Targeted in Scams
1min read Coinbase, the largest US-based crypto exchange, is under intense scrutiny following reports that a rogue employee leaked sensitive customer data. The incident, which affected less than 1% of Coinbase’s monthly active users, has sparked widespread outrage within the crypto community. Users have reported being targeted in sophisticated phishing and impersonation scams, with some victims narrowly avoiding significant financial losses.
One such victim, QwQiao, who works in customer support at Alliance DAO, shared his experience of being targeted by a scam. He managed to outsmart the scammers but noted the precision of their tactics. The scammers reportedly made $7 million in a single day, highlighting the severity of the breach. Adam Cochran, a prominent figure in the crypto community, criticized Coinbase for failing to protect sensitive data such as government IDs and physical addresses, emphasizing that the risks extend far beyond financial loss.
The outrage is compounded by allegations that the breach occurred as early as January, with Coinbase allegedly remaining silent for months. Users and analysts have expressed frustration, suggesting that Coinbase’s inaction left users vulnerable to prolonged attacks. Duo Nine, a renowned analyst, pointed out that Coinbase’s oversight puts even institutional holdings at risk, given its dominant role in the crypto spot ETF market. Coinbase provides custody services for a significant number of Bitcoin and Ethereum ETFs, making it a potential single point of failure.
The implications of the breach are particularly concerning because it was an insider job rather than an external hack. A support employee accessed and sold customer data on the black market, raising questions about Coinbase’s internal controls. Bob Loukas, a position trader, criticized the exchange for allowing support agents to access sensitive data in bulk. Lefteris Karapetsas, founder of Rotki, warned that centralizing real-life identity data alongside crypto balances is a “disaster waiting to happen.” He highlighted the potential for identity theft, extortion, and real-world harm, referencing a recent kidnapping attempt involving a crypto leader’s family.
Intelligence experts suggest that the incident may be part of a larger dark web sale, with a threat actor recently offering an 18-million-record trove from US crypto platforms. Among the records, over 432,000 Coinbase user records were listed for sale, featuring names, emails, phone numbers, addresses, and more. Coinbase has yet to address the user outrage but has offered a $20 million reward fund for information leading to the arrest and conviction of the bad actors. The exchange has also contacted all affected victims, notifying them via email.
