The Coinbase Suffers Internal Breach as rogue employees leaked user data to scammers, prompting the crypto exchange to offer a $20 million bounty for information leading to the perpetrators’ arrest. Announced on May 15, 2025, this incident exposed sensitive customer information, though critical assets remained secure. This article details the breach, Coinbase’s response, and its implications for crypto security and user trust.
A Betrayal from Within
Coinbase Suffers Internal Breach due to a group of overseas customer service employees who were bribed by criminals to steal user data. The breach, confirmed on May 15, 2025, affected less than 1% of Coinbase’s monthly active users. Compromised data included names, addresses, emails, phone numbers, partial Social Security numbers, blurred bank account details, identity documents, account balances, transaction histories, and some internal documents.
Crucially, no passwords, 2FA codes, private keys, or funds were accessed. Coinbase Prime accounts and hot/cold wallets remained untouched. The breach followed accusations in March 2025 by on-chain sleuth ZachXBT, who criticized Coinbase’s lax cybersecurity, estimating $300 million in user losses from scams over three months. Coinbase initially stayed silent but now acknowledges the internal compromise.
Criminal Demands and Coinbase’s Defiance
Coinbase Suffers Internal Breach, and the culprits demanded a $20 million Bitcoin ransom, threatening to leak sensitive user data, including identities and addresses. Coinbase rejected the extortion, instead launching a $20 million reward program for tips leading to the arrest and conviction of those responsible. The exchange swiftly fired the involved employees and is collaborating with U.S. and international law enforcement to pursue criminal charges.
This bold stance reflects Coinbase’s commitment to combating crypto security threats. The company’s refusal to pay underscores its focus on accountability and deterring future attacks, though it faces potential costs of $180–400 million for remediation and user compensation, as reported to the SEC.
Read more: What Is Coinbase? Everything You Need to Know
Coinbase’s Robust Response
Coinbase Suffers Internal Breach, prompting a multi-pronged response to mitigate damage and prevent recurrence:
- Compensation: Coinbase will reimburse users for financial losses after verification.
- Enhanced Account Protection: Affected accounts now require additional verification for large withdrawals and display anti-scam warnings.
- Internal Security Overhaul: New U.S.-based support centers, advanced monitoring, attack simulations, and anti-insider threat tools are being implemented.
- On-Chain Tracing: Coinbase partners with blockchain analytics firms to flag suspicious wallet addresses and recover assets.
- Transparency: Affected users received notifications, with ongoing updates promised.
Coinbase urges users to stay vigilant against impersonation scams, emphasizing that it never requests passwords, 2FA codes, seed phrases, or fund transfers to new addresses. Recommended security measures include enabling withdrawal allowlisting, using hardware security keys for 2FA, locking accounts if suspicious activity is detected, and reporting issues to Coinbase’s security email.
Lessons from Past Incidents
Coinbase Suffers Internal Breach, echoing a 2021 incident where hackers stole user data and demanded $450,000. That event led to a similar bounty program, highlighting Coinbase’s recurring challenge with cybersecurity. The latest breach underscores the risks of insider threats in crypto exchanges, especially as scams grow more sophisticated.
Online discussions reflect mixed sentiment. Some praise Coinbase’s transparency and bounty, while others criticize its initial inaction following ZachXBT’s warnings. The incident may push Coinbase to strengthen Coinbase Prime and user protections, potentially setting a new standard for exchange security.
Conclusion
Coinbase Suffers Internal Breach, exposing user data through rogue employees, but the exchange’s $20 million bounty and swift response signal resilience. By rejecting a $20 million ransom and enhancing crypto security, Coinbase aims to restore trust. With 2FA codes and Coinbase Prime unaffected, the focus on cybersecurity and user compensation could reshape industry standards, though costs may reach $400 million. This saga highlights the ongoing battle against insider threats in crypto.