Coinbase Faces Intense Backlash After Reports Surface Indicating a Rogue Employee Leaked Sensitive Customer Data

Coinbase, the largest US-based crypto exchange on trading volume metrics, is facing intense backlash after Thursday reports indicated a rogue employee leaked sensitive customer data.

Coinbase is facing backlash from users after it disclosed an insider breach that affected less than 1% of the exchange's monthly active users.

According to reports, a rogue Coinbase employee leaked sensitive customer data, which is now being sold on the dark web.

The data leak, which reportedly began as early as January, has seen small portions of customer data sold in batches. One seller on the dark web is offering over 432,000 Coinbase user records for $10,000. The records reportedly include names, emails, phone numbers, addresses, and more.

Among those targeted by scammers is QwQiao, who works in customer support at Alliance DAO. He said that he was almost scammed but managed to outsmart the scammers when they called him to continue the scam.

"I called them out at the end of the call telling them they need to step up their game because this scam is retarded. They told me that they had made $7 million that day," said QwQ_o.

Another user, Adam Cochran, pointed out that Coinbase is disclosing the theft of funds, but the priority should be on how private data is being protected.

"Coinbase’s disclosure here focuses on the stolen funds, but that’s irrelevant in this case. We’re talking about potential identity theft and fraud. Also, no element of KYC/AML policy requires this kind of stuff to be accessible to your customer support agents. I don’t want to hear about what Coinbase is doing to recover funds - I want to hear what they are doing to better deal with private data."

Those on X, formerly Twitter, reacted en-masse to the news. Many were quick to note that Coinbase’s lack of diligence in this case could have serious implications for institutional investors.

Coinbase plays a dominant role in the crypto spot ETF (exchange-traded fund) market. Specifically, it provides custody services for eight of 11 Bitcoin ETFs and eight of nine Ethereum ETFs.

Coinbase exchange also offers trading execution and market surveillance services. Notably, this is not the first time its dominance in custody services has led to concerns about its position as a single point of failure.

“It doesn’t bode well that nearly all crypto ETF issuers have the same custodian for all their BTC and ETH. This makes Coinbase a single point of failure, and that’s scary,” Eleanor Terret recently.

Coinbase did not immediately respond to BeInCrypto's request for comment.

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