Coinbase Hit by Cyber Attack: Hackers Demand $20 Million Ransom Payment

In a shocking turn of events, the largest cryptocurrency exchange based in the U.S., Coinbase, has been hit by a cyber attack. According to a statement released by the company's CEO, Brian Armstrong, hackers have stolen sensitive customer information and are demanding a ransom payment of $20 million worth of bitcoin.

The incident is believed to have occurred when some of Coinbase's customer service agents living outside the U.S. were bribed to hand over personal data on customers, including names, dates of birth, and partial social security numbers. This sensitive information has since been used by hackers to conduct social engineering attacks on unsuspecting customers.

"The stolen data allows them to conduct social engineering attacks where they can call our customers impersonating Coinbase customer support and try to trick them into sending their funds to the attackers," said Armstrong in a social media post. Social engineering is a popular hacking strategy, as humans tend to be the weakest link in any network.

Coinbase did not specify how many customers had their data stolen or fell prey to these scams. However, the company has pledged to reimburse any affected customers and has taken steps to prevent such incidents in the future. The shares of Coinbase fell 6% in trading around midday, but remain up about 22% this month due to gains in bitcoin and other cryptocurrencies.

In a filing with the Securities and Exchange Commission (SEC), Coinbase estimated that it would have to spend between $180 million to $400 million "relating to remediation costs and voluntary customer reimbursements relating to this incident." The SEC filing revealed that the company had previously detected some of its customer service agents accessing data without business need, leading to their termination.

Coinbase's response to the attack has been swift and decisive. In an email demanding the ransom payment, hackers threatened to publicly release the stolen customer data unless they received $20 million worth of bitcoin. However, Armstrong made it clear that the company will not pay the ransom.

"For these would-be extortionists or anyone seeking to harm Coinbase customers, know that we will prosecute you and bring you to justice," said Armstrong. "And know you have my answer." The company has also announced a $20 million bounty for anyone who can provide information that leads to the arrest of those responsible for the hack.

The incident highlights the ongoing threat posed by cyber attacks on cryptocurrency exchanges and the importance of robust security measures to protect customer data. As Coinbase vows to take action against those responsible, it remains to be seen how this will impact the broader cryptocurrency market.