The US Justice Department has launched a criminal investigation into a recent security breach at Coinbase Global, the largest cryptocurrency exchange in the world.
The breach involved cybercriminals bribing a small number of Coinbase customer support employees and contractors in India to steal sensitive customer data, including names, addresses, emails, masked Social Security numbers, and bank account information. However, no passwords, private keys, or access to wallets were compromised.
The attackers used this stolen data to conduct social engineering attacks against Coinbase users, resulting in significant financial losses estimated up to $400 million. They also attempted to extort Coinbase with a $20 million ransom demand, which the company refused.
Instead, Coinbase offered a $20 million reward for information leading to the identification and prosecution of the perpetrators.
The company has fired the employees involved and is cooperating fully with the DOJ and other US and international law enforcement agencies.
Coinbase’s Chief Legal Officer, Paul Grewal, confirmed the company is working closely with the DOJ, which is focusing its investigation on the criminal actors rather than Coinbase itself.
The breach affected less than 1% of Coinbase’s monthly active users, and Coinbase has committed to compensating all affected customers.
The DOJ probe centers on the insider-driven data theft facilitated by bribed employees, highlighting the risks of social engineering in cybersecurity breaches within the crypto sector. The investigation is being led by the DOJ’s criminal division in Washington.
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