Major U.S. Cryptocurrency Exchange Hacked: "Hackers Bribed Insiders"

Customer Data Compromised...
"Demanded 28 Billion KRW in Ransom"

Coinbase, the largest cryptocurrency exchange in the United States, has announced that it suffered a hacking incident involving insider purchases.

According to Bloomberg and other sources on May 15 (local time), Coinbase revealed in a report submitted to U.S. regulatory authorities that its systems had been hacked.

Coinbase explained that the hacker obtained customer account information on May 11 and demanded money in exchange for not disclosing the stolen data. Brian Armstrong, CEO of Coinbase, said, "The hackers demanded $20 million (approximately 28 billion KRW) from the company." The company stated that the compromised information included customer names, addresses, phone numbers, account balance data, transaction history, and government-issued identification such as driver's licenses and passports.

Coinbase also reported that some company data, including internal documents, had been stolen, and stated that it would not pay the ransom demanded by the hackers. Coinbase said, "The hacker obtained this information by bribing several contract workers outside the United States who had access to our internal systems for work purposes." The company added that it expects costs related to recovery and customer compensation from this hack to reach up to $400 million.

Nick Jones, CEO of the cryptocurrency technology platform Zumo, warned, "As the (cryptocurrency) industry grows rapidly, it has become a target for malicious actors," and added, "They are using increasingly sophisticated methods. Recently, they have also been bypassing security through artificial intelligence (AI) and other means."

This incident occurred just before Coinbase is set to be included in the S&P 500, the leading U.S. stock market index, on May 19. Coinbase's stock price had soared 24% on May 13 following the news of its inclusion in the S&P 500, but plunged 7.2% at the close of trading on the day the hacking incident was reported.

Meanwhile, the New York Times (NYT) reported that the U.S. Securities and Exchange Commission (SEC) is investigating allegations that Coinbase falsely reported its user numbers in past public disclosures. According to sources, this investigation began during the administration of former President Joe Biden and is still ongoing. The SEC is examining whether the figure claimed by Coinbase at the time of its 2021 listing?"over 100 million verified users"?was inflated.