Cryptocurrency exchange Coinbase potentially faces a sizable $400 million in customer reimbursements following a major data breach.
In a recent filing with the U.S. Securities and Exchange Commission, digital asset exchange Coinbase revealed that it expects to pay between $180 million and $400 million in remediation and reimbursement costs related to a 2021 data breach and associated phishing attacks.
The breach, which was initially kept under wraps due to an extortion attempt, was discovered by Coinbase in the past months. Upon detection, the company took immediate action, firing the staff or contractors involved and warning clients whose details were compromised.
The data breach did not originate from Coinbase's platform but resulted from the bribing of offshore support contractors and staff. This unfortunate incident exposed sufficient customer information, enabling sophisticated phishing attacks by criminals posing as Coinbase personnel.
Threat actors used this exposed data to conduct targeted phishing campaigns, deceiving some customers into providing account access credentials. Although Coinbase's core systems remained secure, the company acknowledged the significant customer impact from these secondary attacks.
Coinbase refused to pay the ransom and instead reported the extortion attempt to law enforcement. As a result, the criminals demanded payment from Coinbase to prevent them from publicly disclosing the data breach.
In a separate development, Coinbase agreed to a $100 million settlement with New York financial regulators over significant compliance failures that contributed to risks including a major theft in 2021. This amount is distinct from the breach-related compensation estimate.
To address the aftermath of the data breach, Coinbase has begun the process of reimbursing affected customers and implementing additional security measures. The company is also offering a $20 million reward to help catch the criminals responsible for the extortion attempt and data breach.
Early warnings about the coordinated phishing campaigns targeting Coinbase clients were raised by crypto investigator ZachXBT in February. This underscores the need for continuous vigilance in the digital asset space.
As Coinbase continues to navigate this challenging situation, it remains committed to making its customers whole and ensuring the security of its platform.
- Following the data breach at Coinbase, which exposed customer information and enabled phishing attacks, the company is considering paying between $180 million and $400 million in remediation and reimbursement costs.
- With the increase in cybersecurity threats in the business sector, particularly in technology-related fields such as digital asset exchanges, general-news outlets and crime-and-justice publications are closely monitoring incidents like the one at Coinbase.
- To prevent future data breaches and protect its client's personal information, Coinbase is implementing additional cybersecurity measures and offering a $20 million reward for information leading to the capture of those responsible for the extortion attempt and data breach.
