Coinbase's S&P ascend overshadowed by a covert hack, with detectives anticipating the breach

Rewritten Article:

The Coinbase Data Breach: A Long-running Threat Unveiled

In the ever-evolving crypto world, the Coinbase data breach that surfaced on May 15 has stirred up quite the storm. But what's got users really worried—the data that leaked or the fact it might have been going on for months without notice?

Let's dive into the details.

The Coinbase Data Breach: A Human Vulnerability Exploited

Coinbase, one of the leading cryptocurrency exchanges, confirmed a massive data breach that sent shockwaves through the crypto community. But this breach wasn't the result of a technical glitch; it was a human factor issue involving social engineering.

Criminals allegedly bribed third-party contractors working in overseas customer support roles to pilfer sensitive user data from Coinbase's internal systems. These insiders then bypassed standard cybersecurity measures, granting the attackers direct access to restricted databases.

Coinbase detected the intrusion through its internal monitoring system. However, signs suggest the breach may have begun months earlier, raising concerns about the company's response time.

Approximately less than 1% of Coinbase's 9 million monthly transacting users were affected. While crypto assets, private keys, API credentials, and transaction histories remained untouched, the exposed data includes names, email addresses, phone numbers, addresses, and in some U.S. cases, partial Social Security numbers. Some users have also reported on social media that their KYC documents, such as passports or driver's licenses, may have been accessed, although Coinbase has not confirmed this.

The Aftermath: A Fall in Trust and a $20M Bounty

Following the discovery of the breach, Coinbase launched a detailed response plan aimed at limiting damage, reinforcing its internal safeguards, and helping affected customers recover. The company maintains that the attackers were not after draining accounts but building a list of users they could deceive into giving up control.

In parallel, the criminals demanded $20 million from Coinbase in exchange for holding back the leaked information. Coinbase declined and instead offered a $20 million bounty, payable to anyone who helps bring the attackers to justice.

Coinbase also pledged to reimburse users who were swindled into transferring their crypto to fraudsters as a direct result of this incident. Reimbursements will be made on a case-by-case basis to confirm the losses are tied to the fallout from the breach.

In addition to reimbursements, Coinbase has introduced new security measures for affected users, including additional identity verification for large withdrawals, scam-awareness prompts during certain transactions, and intentional delays in transaction processing for high-risk users as part of ongoing risk monitoring.

Internally, Coinbase is focusing on limiting future exposure by bolstering security oversight at its global support centers, establishing a new support hub in the U.S., enhancing its investment in automated insider threat detection, and stress-testing internal systems using simulated attacks to identify weaknesses.

Users are advised to enable wallet withdrawal allow-listing, use hardware keys for two-factor authentication wherever possible, and lock their account via the app if anything feels suspicious.

The Warning Signs: A Flight Warned Unheeded?

Long before Coinbase officially acknowledged the breach, independent blockchain investigator ZachXBT had been raising concerns about a burgeoning pattern of user-targeted scams linked to the platform.

Back in early February 2025, he published a comprehensive thread detailing multi-million dollar thefts from Coinbase users over just two months—December 2024 and January 2025. Working alongside analyst Tanuki42, ZachXBT gathered case data from blockchain flows and victim messages, identifying a recurring pattern in which users were tricked by sophisticated impersonation tactics.

These early warnings suggested a much larger underlying issue. ZachXBT's findings highlighted operational lapses on Coinbase's side, including previously unreported security failures, misconfigured API keys used for tax software, bugs that allowed verification codes to be sent to non-existent accounts, gaps in internal systems that may have contributed to losses through Coinbase Commerce, and the laundering of funds from external exchange hacks.

"Coinbase has quietly had related security incidents they did not publicly address," ZachXBT noted, estimating that some of these lapses led to tens of millions in user losses without formal acknowledgement.

What made these scams particularly dangerous, according to ZachXBT, was the company's apparent delay in flagging suspicious addresses and the difficulties victims faced in reaching effective support, especially outside U.S. time zones.

The Future of Trust: Regaining What Was Lost?

The public reaction to the Coinbase breach has been swift and overwhelmingly critical. Concerns extend far beyond the exposure of funds, questioning the internal policies that allowed such sensitive information to be accessible to third-party support teams in the first place.

Adam Cochran, a partner at Cinneamhain Ventures, raised serious concerns about how a firm as large and well-resourced as Coinbase failed to maintain proper data security protocols:

"No element of KYC/AML policy requires this kind of stuff to be accessible to your customer support agents ... They got physical addresses, and government IDs. Things you can't change, and things that put customers at physical risk."

Cochran's concerns are amplified by attorney Ariel Givner, who points to the timing of the disclosure. According to her, the extortion email demanding $20 million was sent on May 11, but users were only notified after Coinbase chose not to comply, implying they knew of the incident before making it public.

As the fallout continues, the fear lingers that the release of residential and identity data could increase the risk of physical threats, such as kidnappings and extortion attempts, similar to recent incidents in France where known crypto holders have been targeted. While no such incidents have been linked to this breach yet, the risk is now that lifelong targets have been placed on the backs of affected users.

"Even if those users transfer their funds out of Coinbase, they need to look over their shoulder the rest of their lives," warns Alex Valaitis, a founder and crypto strategist.

The data breach at Kraken, a similar cryptocurrency exchange to Coinbase, has sparked discussion about the potential exploitation of human vulnerabilities in the crypto world.
Some users have reported on social media that their tokens on decentralized exchanges (DEX) may have been accessed due to the breach, raising concerns about the security of tokens on these platforms.
With the increase in privacy concerns, users are looking for alternatives like Tron's privacy-focused tokens to protect their assets and personal information.
Binance has announced a partnership with a leading sports organization, aiming to bring cryptocurrency payments to sports events worldwide, making it easier for fans to use cryptocurrencies for merchandise and tickets.
In light of the breach, experts suggest that crypto users should use hardware wallets to secure their Bitcoin and other cryptocurrencies, and regularly update their two-factor authentication credentials.
Amid the ongoing concern about data leaks, XRP holders are considering moving their coins to multi-sig wallets, allowing them to require multiple approvals before transactions can be completed, providing an extra layer of security.