Coinbase Stock Rises 18% Despite $400M Cyber Breach, SEC Probe

Coinbase, a prominent cryptocurrency exchange, faced a tumultuous week marked by significant cybersecurity breaches and regulatory scrutiny. The company disclosed a $400 million cybersecurity incident, one of the largest in its history, where an overseas contractor was bribed to steal sensitive user data. This data included names, addresses, partial bank details, and ID documents, affecting less than 1% of its customers. The criminals attempted to blackmail Coinbase into paying $20 million to prevent the data from being released, but the company refused and offered a $20 million bounty for information leading to the perpetrators.

Adding to its woes, Coinbase is also under investigation by the U.S. Securities and Exchange Commission (SEC) regarding its user numbers. The SEC probe, which began during the Biden administration, continues despite the SEC dropping its lawsuit against the exchange. Coinbase had previously claimed over 100 million "verified users" in its 2021 public offering document but stopped using this language in its marketing materials by 2023.

Despite these challenges, Coinbase ended the week on a positive note. The company recently joined the S&P 500 and saw its stock price rise by 18% compared to the previous week, closing at $266.78. This highlights the resilience of the company amidst the turbulence.

Meanwhile, the Nasdaq welcomed two new cryptocurrency-related companies: Galaxy Digital and eToro. Galaxy Digital, an investment and financial services firm, has been listed on the Toronto Stock Exchange since 2018 and has been reporting its earnings for years. The company's CEO, Mike Novogratz, expressed frustration with the process of redomiciling to the U.S., describing it as "un-American, unfair, and infuriating."

eToro, a trading platform, also made its debut on the Nasdaq. The company faced a challenging road to its U.S. IPO, having previously attempted and failed to go public via a SPAC deal in 2021. Despite these hurdles, eToro's IPO round was reportedly 10x oversubscribed, leading to a $5 billion market cap after its debut. This success underscores the growing interest and investment in the cryptocurrency sector.