Lawsuit against Coinbase: 70,000 customers affected by security gap!

Lawsuit against Coinbase: 70,000 customers affected by security gap!

On May 23, 2025, it was announced that the crypto exchange Coinbase was facing a lawsuit filed with the Maine Attorney General's Office. The reason for this is an attack that affected almost 70,000 customers and took place on December 26, 2024, but was not discovered until May 11, 2025. The plaintiffs argue that Coinbase should have informed affected users about the security vulnerability earlier in order to minimize their damage. CEO Brian Armstrong commented on the situation on May 15, emphasizing the measures being taken to secure the platform.

The investigation into the incident shows that Coinbase’s support tools only allow limited access to customer information. While passwords, private keys or funds are not affected, customer service representatives had access to personal information such as names, dates of birth and addresses. This poses the risk of social engineering attacks through which criminals attempt to obtain sensitive information.

Origin and effects of the attack

The attack resulted in estimated losses of $400 million, Bloomberg reports. It was discovered that the cyber gangsters were trying to initiate an extortion attempt for $20 million. To achieve this, they recruited support staff abroad who were bribed to spy on internal data. In addition, external actors contacted several customer support contractors to access Coinbase's internal systems.

Although less than 1% of Coinbase users were directly affected, the theft resulted in a small group of account data being obtained. Coinbase confirmed that the stolen data did not include passwords or private keys. Nevertheless, after the theft, the attackers demanded $20 million worth of Bitcoin to keep the vulnerability secret. However, Coinbase rejected this demand and instead offered a $20 million reward for information about the perpetrators.

Compensation measures

To help affected users who advisably sent cryptocurrencies to phishing scammers, Coinbase plans to provide compensation. The estimated cost of these measures is between $180 and $400 million. This estimate was disclosed in an annual report filed with the U.S. Securities and Exchange Commission on May 15.

To prevent future incidents, Coinbase intends to overhaul its internal data management processes and restructure parts of its customer support. The incident highlights the growing threat of social engineering methods that are increasingly endangering Coinbase users. A security analyst estimated that perpetrators stole about $45 million through phishing attacks in the week leading up to May 7, with Coinbase users potentially losing more than $300 million annually to such scams.

Despite the challenges and the attack, Coinbase looks back on a successful 2025. The company was included in the US leading stock index S&P 500 and the COIN share has increased by almost three percent since the beginning of the year. The attack has not had a major negative impact on the share price so far, demonstrating the company's resilience in a difficult market environment.

For more details on this incident you can read the reports from BTC ECHO and Cointelegraph see.