Coinbase (COIN) shares plummet after hackers extort $20 million from the company

The hackers targeted Coinbase's support agents overseas, offering cash bribes to a small group of workers for data from customer support tools.

Crypto exchange Coinbase (NASDAQ:COIN) has become a victim of a crypto scam in an incident that saw hackers try to extort the company for $20 million. The exchange disclosed the incident in a filing with the Securities and Exchange Commission on Thursday.

Earlier this year, hackers targeted Coinbase’s support agents overseas, offering cash bribes to a small group of workers for data from customer support tools, the company said. The copied data handed over by the hackers involved less than 1% of its monthly transacting users.

The hackers aimed to gather a customer list they could contact while pretending to be Coinbase, intending to trick people into handing over their crypto. They then tried to extort Coinbase for $20 million to cover this up, the company said.

No, we are not going to pay your ransom

In response, Coinbase said it’s hardening systems around customer support to make future attacks more difficult. Armstrong also said that instead of paying the $20 million, they will use it to go after the hackers.

“Instead of paying $20 million dollar ransom, we are turning it around,” Armstrong said, offering a $20 million reward for the capture of the suspects.

While no customers lost money from the attack, Coinbase expects the incident to cost the company approximately $180 million to $400 million in remediation costs and voluntary customer reimbursements relating to the incident, according to the filing. The filing says after a full review, the numbers could be adjusted upwards or downwards.

“The full impact of these events are not yet known,” the filing states.

David Acosta, founding partner at ARBOai, a consulting firm that specializes in AI profit audits, told Quartz that Armstrong’s response was a “power move” and “transparent.” He says the company took the right steps with customer protection.

“By prioritizing customer protection over short-term risk mitigation, like paying ransoms, they reinforce trust in an industry where security breaches can devastate market confidence,” Acosta said, adding that the crypto sector has had multiple black eyes over the last decade. He said the action by hackers is a reminder that top-tier exchanges remain high-value targets.input: In This Story

Crypto exchange Coinbase (NASDAQ:COIN) has become a victim of a crypto scam in an incident that saw hackers try to extort the company for $20 million. The exchange disclosed the incident in a filing with the Securities and Exchange Commission on Thursday.

Earlier this year, hackers targeted Coinbase’s support agents overseas, offering cash bribes to a small group of workers for data from customer support tools, the company said. The copied data handed over by the hackers involved less than 1% of its monthly transacting users.

The hackers aimed to gather a customer list they could contact while pretending to be Coinbase, intending to trick people into handing over their crypto. They then tried to extort Coinbase for $20 million to cover this up, the company said.

No, we are not going to pay your ransom

In response, Coinbase said it’s hardening systems around customer support to make future attacks more difficult. Armstrong also said that instead of paying the $20 million, they will use it to go after the hackers.

“Instead of paying $20 million dollar ransom, we are turning it around,” Armstrong said, offering a $20 million reward for the capture of the suspects.

While no customers lost money from the attack, Coinbase expects the incident to cost the company approximately $180 million to $400 million in remediation costs and voluntary customer reimbursements relating to the incident, according to the filing. The filing says after a full review, the numbers could be adjusted upwards or downwards.

“The full impact of these events are not yet known,” the filing states.

David Acosta, founding partner at ARBOai, a consulting firm that specializes in AI profit audits, told Quartz that Armstrong’s response was a “power move” and “transparent.” He says the company took the right steps with customer protection.

“By prioritizing customer protection over short-term risk mitigation, like paying ransoms, they reinforce trust in an industry where security breaches can devastate market confidence,” Acosta said, adding that the crypto sector has had multiple black eyes over the last decade. He said the action by hackers is a reminder that top-tier exchanges remain high-value targets.output: A new report by Bloomberg on Friday highlighted that the bipartisan group of U.S. lawmakers, including Senators Tom Carner (R-MO) and Jack Reed (D-RI), and Representatives Ann Stevens (R-WV) and Maxine Waters (D-CA), urged the Biden administration to impose sanctions on North Korea's main intelligence agency, the Reconnaissance General Bureau (RGB).

The lawmakers claimed that the RGB was involved in the 2022 cyber heist of cryptocurrency from Harmony blockchain, which was valued at approximately $100 million at the time