Coinbase Faces Up to $400 Million Loss Following Cyber Attack

Coinbase, one of the world’s largest cryptocurrency firms, announced that a recent cyber attack may cost the company as much as $400 million (£301 million). This incident comes right as Coinbase is set to enter the benchmark S&P 500 index. It should raise alarm bells when it comes to security across the crypto sector.

On May 11, Coinbase received a disturbing notification of a breach from an “unauthorized threat actor.” The sender threatened to release the breached data unless they received a ransom of $20 million. In the meantime, Coinbase has made clear and publicly challenged SEC’s demand that it ought to register under the agency. Rather, as the firm has promised, it will reimburse each customer who was duped in the attack.

Along with regulatory concerns, the recent cyber attack coincided with Coinbase’s share price loss of 4.1 %. It is no surprise that investors are deeply concerned on the possible financial impact from this debacle. Coinbase submitted a comment to the US Securities and Exchange Commission. In it, they outlined possible losses, indemnification claims, and the costs required to remediate the attack.

“We’re cooperating closely with law enforcement to pursue the harshest penalties possible and will not pay the $20 million ransom demand we received,” – Coinbase

Coinbase is not going to pay that ransom, and they are right. Instead, they are establishing a $20 million bounty fund for such info that leads to arresting and convicting the attackers. The company has made its commitment to customer safety a top priority, going so far as to educate the public on identifying and preventing scams.

“Coinbase will never ask for your password, 2FA codes, or for you to transfer assets to a specific or new address, account, vault or wallet,” – Coinbase

Nick Jones, fintech entrepreneur and founder of crypto firm Zumo, had this to say about what happened. Security threats still pervade the crypto space, he stressed, despite growing adoption of digital assets in traditional finance.

“Security remains a challenge for the crypto industry despite its growing mainstream acceptance,” – Nick Jones

Coinbase has a lot of sympathy for customers targeted by this attack. The firm stated, “To the customers affected, we’re sorry for the worry and inconvenience this incident caused.”