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Coinbase Faces Fallout from Major Data Breach
In December 2024, Coinbase suffered a significant data breach that went unnoticed for months, ultimately coming to light in May 2025. The breach compromised the personal information of approximately 70,000 users, leading to a series of alarming events. Hackers demanded a ransom of US$20 million (AU$31 million) to prevent the stolen data from being disclosed, a demand that Coinbase staunchly refused.
In a bold move, the attacker transferred around US$42.5 million (AU$65 million) from Bitcoin to Ethereum through THORChain before mocking prominent blockchain investigator ZachXBT in an Ethereum transaction. This taunting message, which included a meme of basketball player James Worthy, was shared by ZachXBT on his Telegram channel, linking it directly back to the Coinbase breach.
Compounding the situation, THORChain itself is currently under investigation for alleged involvement in laundering funds from another major incident: the Bybit hack of early 2025, attributed to the North Korean hacking group known as Lazarus.
The Consequences of the Breach
The breach, which went undetected until mid-May, was first disclosed in a filing with the Maine Attorney General. Sensitive information such as names and home addresses was accessed, prompting Coinbase to take immediate action. Instead of paying the ransom, the exchange chose to offer a bounty of US$20 million for information leading to the identification of the hacker(s).
The financial implications of this breach are estimated to be staggering. Coinbase anticipates remediation costs between US$180 million (AU$280 million) and US$400 million (AU$623 million). This figure reflects a complex blend of legal fees, compensation for affected users, and necessary system improvements.
Within days of the breach’s revelation, Coinbase found itself facing several lawsuits alleging insufficient security measures and delayed responses to the breach. At least six legal actions were initiated shortly after the public disclosure, intensifying pressure on the company to examine and improve its security protocols.
Key Points:
- Date of Breach: December 2024, disclosed May 2025.
- User Impact: Personal data of approximately 70,000 Coinbase users exposed.
- Ransom Demand: Hackers requested US$20 million (AU$31 million); Coinbase refused to pay.
- Cost of Breach: Estimated between US$180 million (AU$280 million) and US$400 million (AU$623 million) due to legal, user compensation, and system overhaul expenses.
- Legal Repercussions: At least six lawsuits filed against Coinbase following the breach.
This incident puts Coinbase in a precarious position during a time when many are scrutinising the security of digital currency platforms. The exchange’s reputation, already vulnerable in the current market climate, is now under intense scrutiny as it works to navigate both the immediate repercussions of the breach and the long-term implications of customer trust and regulatory compliance.
As the landscape of cryptocurrency continues to evolve rapidly, ensuring the security of user data remains a paramount concern for exchanges like Coinbase. The fallout from this incident may serve as a catalyst for broader discussions on regulatory and security frameworks within the crypto industry. The response from Coinbase, combined with the legal outcomes, will likely set precedents within the space for how similar breaches are handled in the future.
