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Coinbase Knew of Client Data Breach for Months—Why Didn’t They Say Anything?
When Coinbase discovered that rogue contractors had stolen customer data in January 2025, the crypto exchange faced one of its most serious security challenges yet. The breach exposed names, email addresses, partial Social Security numbers, and other sensitive information. Overseas contractors, who had no legitimate business need for the data, accessed and sold it to cybercriminals.
Rogue contractors exploited access to steal and sell sensitive customer data to cybercriminals.
For months, Coinbase kept this information under wraps. Customers whose data was stolen remained unaware that their personal information was floating around in the dark corners of the internet. The company didn’t go public with the breach until May 14, 2025, when they filed mandatory regulatory paperwork. By then, cybercriminals had already used the stolen data to trick customers into handing over their crypto holdings.
The situation escalated when a threat actor sent Coinbase an email on May 11, demanding $20 million in ransom. Around the same time, blockchain watchers noticed $42.5 million worth of Bitcoin being swapped for Ethereum through THORChain. Whether this was connected to the breach remains unclear, but the timing raised eyebrows.
The financial fallout looks brutal. Coinbase estimates remediation costs between $180 million and $400 million, including voluntary customer reimbursements. The company had already been dealing with criticism about its risk models, with reports suggesting $300 million in yearly losses from social engineering scams.
Now they face a class action lawsuit alleging negligence, plus potential SEC enforcement action for insufficient internal controls. The Department of Justice launched an investigation with international law enforcement partners. Coinbase’s Chief Legal Officer Paul Grewal has publicly confirmed the company’s ongoing legal efforts to pursue criminal charges against the perpetrators.
Meanwhile, affected customers are left wondering why Coinbase waited so long to notify them. The plaintiffs in the lawsuit argue the delay was inexcusable, especially given that the company spends millions monthly on cybersecurity. Coinbase has since established a new support hub in the U.S. to enhance security controls and prevent future insider threats.
For crypto holders who thought their assets were safe with a major exchange, this breach serves as a reminder to DYOR about security practices. While Coinbase promises to reimburse customers tricked by scammers using the stolen data, the damage to trust might take longer to repair than any financial losses.