Hackers are demanding $20 million in Bitcoin from Coinbase to stop the release of stolen client data. In a combative stance against the extortion attempt, CEO Brian Armstrong offered a $20 million reward for information leading to the attacker’s arrest.
Cybercriminals allegedly “bribed and recruited” foreign support agents employed by Coinbase. As part of the sophisticated attack, they used them to gain unauthorized access to the exchange’s customer support systems. Coinbase claims that the attack impacted less than 1% of its monthly transacting users. However, these insiders obtained critical account data from a selection of consumers.
According to reports, among the stolen data are government ID photos, account balances, and corporate information.
Coinbase Reacts to the Breach
This security event comes after on-chain investigator ZachXBT claimed three months ago that Coinbase users had lost almost $300 million to social engineering fraud. Although Coinbase has not responded directly to this particular allegation, the timing raises the question of whether these incidents are related.
Coinbase estimated that the initial costs of remediation and voluntary consumer repayments would range from $180 million to $400 million. Users tricked into sending money to the attackers as part of the bigger operation will have their money returned.
The corporation acted quickly to discipline the individuals involved in the breach. It immediately fired them and reported the incident to international and U.S. law authorities. The business has also said that it plans to file criminal charges against the guilty parties.
Because the cryptographic keys to access cryptocurrency assets were unaffected, Coinbase Exchange assured customers that their money remained safe even after the incident. The business will monitor the situation carefully as it collaborates with law enforcement to find and capture the perpetrators.
Because cryptocurrency transactions are irrevocable and offer the possibility of financial gain, hackers continue to find them enticing. This underscores the persistent security issues that cryptocurrency exchanges face. Scammers have regularly impersonated Coinbase to take advantage of the company’s reputation as the third-largest exchange in the world and the most well-known cryptocurrency brand in various areas.
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