Coinbase Faces Backlash After Data Breach Impacts Nearly 70,000 Users
By: Eliza Bennet
Coinbase is embroiled in controversy following a substantial data breach that jeopardized the personal information of approximately 69,461 users, as confirmed by a filing with the Maine Attorney General's Office. This breach, which affected less than 1% of Coinbase's monthly active users, included sensitive information such as names, contact details, social security numbers, and identity documents. The breach was perpetrated by a group of overseas support agents who were allegedly bribed by cybercriminals to leak internal data. The stolen information was reportedly used in social engineering scams to impersonate Coinbase staff and defraud users.
The breach was initially discovered in May 2025, almost six months after the incident reportedly occurred on December 26, 2024. This delay in detection raises significant concerns over Coinbase's security protocols and its ability to safeguard its users' data. The attackers also allegedly demanded a $20 million ransom in Bitcoin, but Coinbase refused to comply. Bringing the matter into public light has fueled criticism towards the platform and raised questions about the efficacy of existing Know Your Customer (KYC) and anti-money laundering (AML) regulations.
Despite assurances from Coinbase CEO Brian Armstrong that the stolen data had not surfaced on the dark web, he highlighted the urgent need to revisit and potentially revise outdated regulations like the Bank Secrecy Act. Armstrong suggested that these laws, crafted decades ago, might infringe on constitutional rights by violating the Fourth Amendment, which protects against unreasonable searches and seizures.
The incident has further been complicated by criticisms towards Coinbase's recent amendment to their user agreement. Molly White, a well-known crypto critic, pointed out a clause implemented shortly after the breach disclosure that limits users from pursuing class-action lawsuits, mandating arbitration in New York instead. While Armstrong defended this update, clarifying that it was planned prior to the breach, it has done little to alleviate mounting scrutiny. Additionally, accusations from security experts like Taylor Monahan suggest Coinbase was warned about suspicious activities earlier but allegedly ignored these alerts until the problem escalated beyond control.
