Coinbase Faces DOJ Probe After $400M Data Breach

The US Department of Justice is conducting an investigation into a data breach at Coinbase, a prominent cryptocurrency exchange. The breach, which was disclosed to the public on May 15, involved a group of customer support contractors in India who were terminated for abusing their access to systems to steal account data for a subset of customers. The contractors reportedly accepted bribes in exchange for allowing criminals access to user data.

Coinbase's chief legal officer, Paul Grewal, stated that the exchange has notified and is working with the Department of Justice and other US and international law enforcement agencies. The company welcomes the pursuit of criminal charges against those responsible for the breach. The data breach resulted in social engineering attacks targeting Coinbase users, including a partner from Sequoia Capital, with losses estimated at up to $400 million. The attackers also attempted to extort $20 million from Coinbase in exchange for not disclosing the breach, which the company refused.

The social engineering attacks have led to several lawsuits against Coinbase, with users alleging that the company mishandled their personal data. One user, a retired artist named Ed Suman, reported losing $2 million to the scammers. The investigation by the Department of Justice is focused on understanding the cause and extent of the breach, as well as allegations that external contractors may have collaborated with hackers, exacerbating the security issues. The breach has raised concerns about the security measures in place at Coinbase and the broader cryptocurrency industry, with the investigation aiming to identify the vulnerabilities that were exploited and to hold those responsible accountable.