The U.S. Department of Justice (DOJ) has launched a criminal investigation into a major data breach at crypto exchange Coinbase, which occurred last week. According to early findings, the attack involved bribed insiders in India, who helped steal sensitive customer data and delivered a $20 million ransom demand.

High-Profile Data Compromised — Even Sequoia’s Roelof Botha Targeted

Among the affected individuals was Roelof Botha, managing partner at Sequoia Capital and a well-known member of the “PayPal mafia,” alongside Elon Musk and Peter Thiel. Hackers reportedly accessed personal information tied to his Coinbase account, including his phone number, residential address, and other confidential data.

Bloomberg reports that attackers relied on social engineering tactics, deceiving people rather than hacking computer code. Support staff based outside the U.S. downloaded data from Coinbase's internal systems. These individuals have since been terminated.

Coinbase: Damages Could Reach $400 Million

Coinbase said it received the ransom demand via email on May 11. The company estimates that the fallout from the breach could cost as much as $400 million, including system recovery and new security measures.

Coinbase’s Chief Legal Officer Paul Grewal stated that the firm has notified the DOJ and other U.S. and international authorities:

“We are fully cooperating and welcome efforts to bring the perpetrators to justice.”

Coinbase Faces Crisis on the Brink of Major Milestone

Ironically, the breach occurred just days before Coinbase is set to be added to the S&P 500 index, a historic milestone for the crypto industry. Despite the breach, analyst optimism and the inclusion announcement sent Coinbase shares up by 20%.

The incident underscores how the rising profile of crypto exchanges attracts increasing attention from cybercriminals, even as Wall Street embraces digital asset firms. Officials say the investigation is still ongoing and could take several more months.

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