Coinbase Targeted by Hackers in $20m Extortion Attempt
US cryptocurrency exchange Coinbase has been targeted by hackers who stole customer data and demanded $20m to prevent its public disclosure, the company confirmed on Thursday. The cyber attack, which was reportedly carried out on Sunday, comes as Coinbase prepares to join the S&P 500 index next Monday.
According to a statement on its website, Coinbase said the hackers’ aim was to gather a customer list they could contact while pretending to be Coinbase, tricking people into handing over their crypto. The hackers then tried to extort Coinbase for $20m to cover this up, but the company refused to pay. "We said no," the group said.
The incident has resulted in Coinbase’s shares falling 4.2% in New York, despite soaring by a quarter on Tuesday after the announcement of its inclusion in the US blue-chip stock index. The California-based group has promised to pay a $20m reward for information leading to the arrest and conviction of the criminals responsible.
This latest cyber attack highlights the vulnerability of the cryptocurrency industry to hacking. According to Chainalysis, a blockchain data group, hacks on crypto exchanges climbed 21% last year to more than $2.2bn, with most of the activity centred on the Asia-Pacific region. Hackers linked to the North Korean government stole $1.3bn of that total.
The industry has also seen a spate of high-profile hacks on companies around the world. Luxury French fashion house Dior, UK department store Harrods, and retailer Marks and Spencer have all been hit by cyber attacks in recent weeks. Coinbase said criminals had "bribed and recruited" support agents working outside the US to steal its customer data, and that staff involved in the scandal had been fired immediately.
The stolen data, which accounted for a "small subset" of customers, included partial social security, bank account details, account data, and identity images such as passports and driving licences. However, Coinbase assured customers that the hackers did not secure passwords, keys, or funds from accounts. The company also said it would reimburse customers who were tricked into sending funds to the attackers, which could be in the range of $180m to $400m.
As reported by The Financial Times, Coinbase’s inclusion in the S&P 500 index is seen as a significant milestone for the cryptocurrency industry. Dovile Silenskyte, director of digital assets research at WisdomTree, described the move as "more than symbolic" because it would help push some of the trillions of dollars in funds that track the benchmark into the stock. "Crypto is no longer a volatile sideshow. It is being hard-wired into the financial system’s core architecture," she said.
The cryptocurrency industry has undergone a revival since US President Donald Trump’s election victory. Bitcoin has climbed by a third in the past month to more than $100,000, its highest level since January. As Coinbase joins the S&P 500 index, it will be closely watched by investors and industry experts alike.
In response to the hack, Coinbase has taken immediate action to protect its customers and prevent further attacks. The company’s commitment to reimbursing customers who were tricked into sending funds to the attackers demonstrates its dedication to maintaining trust and confidence in the cryptocurrency market.
The increasing frequency and sophistication of cyber attacks on the cryptocurrency industry highlight the need for robust security measures and vigilant monitoring. As the industry continues to grow and mature, it is essential that companies like Coinbase prioritize the protection of their customers’ data and assets.
According to The Financial Times, the incident serves as a reminder of the risks associated with investing in cryptocurrency and the importance of conducting thorough research and due diligence before engaging with any cryptocurrency exchange or platform. As the industry continues to evolve, it is crucial that investors and customers remain informed and up-to-date on the latest developments and security measures.
The Financial Times also reports that the incident has raised questions about the security and stability of the cryptocurrency market, and whether it is ready for mainstream adoption. However, with companies like Coinbase taking proactive steps to protect their customers and prevent future attacks, the industry is likely to continue growing and maturing in the coming months and years.
Sources:
The Financial Times
Chainalysis
WisdomTree
