Coinbase, the top U.S.-based crypto exchange, is under pressure following a cyberattack that compromised sensitive customer data. The breach, reportedly carried out with the help of bribed overseas customer service agents, led to an estimated $400 million loss. Hackers demanded a $20 million Bitcoin ransom, which Coinbase declined. In response, CEO Brian Armstrong launched a $20 million bounty program to track down those responsible and pledged full reimbursement for affected users.
This incident coincides with an ongoing SEC investigation into Coinbase’s financial reporting. Regulators are probing whether the company misrepresented user data in previous disclosures. Coinbase insists the investigation stems from an earlier regulatory administration and maintains its operations have been transparent. Still, the inquiry has stirred investor anxiety over potential legal consequences.
Following the twin crises, Coinbase’s stock (COIN) slid more than 8%, despite its recent addition to the S&P 500 and a $2.9 billion acquisition deal with crypto options exchange Deribit. The security breach and regulatory spotlight have heightened concerns over the company’s governance and risk management.
The entire crypto sector is now watching how Coinbase handles the situation. The company’s actions in the coming weeks could have far-reaching effects on industry regulation and investor trust in centralized platforms.
