Listen, there's a pretty tough story that's worth discussing. Recently, the Coinbase crypto exchange suffered a major data leak, and this is not just another case from the world of cybersecurity. This situation, according to TechCrunch founder Michael Arrington, can lead to deaths. And he doesn't seem to be exaggerating.
What happened?
Hackers broke into Coinbase and gained access to very sensitive information: home addresses, phone numbers, account balances, photos of identity cards and other user data. After that, they tried to blackmail the company, demanding $20 million in bitcoins. Coinbase refused to pay, and instead announced a reward of the same $20 million for information about criminals.
The exchange also promised to reimburse customers who were tricked into transferring funds by fraudsters. The U.S. Department of Justice has now taken over the case.
But what's really disturbing is that this data can already be used for violence.
Why is it dangerous?
Arrington (by the way, he is an investor in Coinbase himself) claims that a leak of this magnitude is not only about money, it is a direct threat to lives. He recalled that in recent months, cases of kidnapping for cryptocurrencies have become more frequent in Europe and the United States.:
Ledger's co-founder was abducted and tortured in France.
Popular blogger Amurant was robbed right at her house.
The father of a cryptomillionaire had his finger cut off to gain access to his wallet.
Relatives of cryptographers were abducted and threatened with weapons.
Now imagine that someone has a database with names, addresses, and crypto balances. It's literally a list of goals. And if earlier such cases were isolated, now, after hacking, it can become a systemic problem.
And who is to blame?
This is where the argument begins. Arrington believes that company executives should be criminally liable if they failed to protect such data. According to him, the laws should be tougher, otherwise such cases will be repeated over and over again.
But the former CTO of Coinbase, Balaji Srinivasan, says that the problem is deeper — in government regulation. This is what forces companies to collect and store KYC data ("Know your customer"), which users often do not want to transfer at all. He believes that the way out is to decarbonize KYC through technologies like zero—knowledge proofs, where personal data is not transmitted directly at all.
And now what?
Coinbase is cooperating with the authorities, the investigation is underway. But the crypto community is tense. Because we are no longer talking about the loss of funds, but about the fear for the safety of our own and our loved ones.
So the question is: how much would you trust the exchange if you knew that your data could be a reason for an attack? And isn't it time to rethink how KYC platforms work?
