The Coinbase exchange refused to pay the ransom in bitcoins to the extortionists after the data leak.
The CEO of the cryptocurrency exchange Coinbase, Brian Armstrong, stated that cybercriminals attempted to extort a ransom of $20 million in bitcoins from the exchange for not disclosing customer data. The exchange refused to pay the criminals. According to Armstrong, the fraudsters obtained personal data of Coinbase customers, including images of identification, transaction history, names, as well as bank account information and social security numbers.
Armstrong mentioned that the cybercriminals obtained the data through overseas customer support agents who were bribed. The CEO assured that the hack affected less than 1% of users who make transactions on Coinbase each month. The attackers did not manage to obtain private keys and passwords for accessing accounts, he added. Access to customer accounts and wallets was not compromised, and Coinbase Prime accounts were also unaffected, said Armstrong.
Unknown individuals threatened to release the acquired data, which could be used by any fraudsters to steal crypto assets. Typically, fraudsters use 'social engineering' to deceitfully extract keys from individuals to steal crypto assets. 'The goal of the extortionists was to compile a list of clients they could contact, posing as Coinbase. They attempted to extort $20 million from us, but we refused,' said Brian Armstrong. Coinbase reported the incident to law enforcement.
The exchange also submitted a report on the hacker attack to the U.S. Securities and Exchange Commission (SEC). According to estimates by Coinbase, the costs for investigation, compensation for defrauded clients, and enhanced security could range from $180 million to $400 million. Coinbase is willing to pay the unknown $20 million to anyone who helps identify the criminals.
Recently, Armstrong stated that Coinbase planned to buy bitcoins for the long term under the company's Strategy, which is considered the largest holder of the first cryptocurrency. Later, the exchange abandoned this idea to avoid competing with traders.