Coinbase (COIN) just got hit where it hurts. The world’s third-largest cryptocurrency exchange refused to be blackmailed after an insider phishing scheme stole user data and demanded $20 million in Bitcoin as ransom, according to a May 15 blog post from the company.
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Instead of folding under pressure, Coinbase walked away from the table. Now it faces an eye-watering reimbursement bill that could climb as high as $400 million.
Attackers Bribe Insiders to Steal Coinbase User Data
The scheme was straight out of a cybercrime thriller. A group of external criminals spent months recruiting overseas customer support contractors. Their goal was to bribe them for access to internal Coinbase systems and siphon off user data from accounts.
“These insiders abused their access to customer support systems to steal the account data for a small subset of customers,” Coinbase confirmed. No passwords, private keys, funds, or Coinbase Prime accounts were compromised.
But even a limited breach is enough to cause chaos. Less than 1% of Coinbase’s active user base was affected, yet the fallout has been enormous.
Coinbase Refuses to Pay Ransom and Offers its Own Bounty
After grabbing the stolen data, the attackers tried to strong-arm Coinbase into paying a $20 million ransom in Bitcoin. The company flatly refused. Instead, Coinbase fired back with an offer of $20 million for information leading to the arrest and conviction of those behind the attack.
This cyber cat-and-mouse game has put Coinbase squarely in the center of an escalating battle between crypto firms and sophisticated phishing rings.
Phishing Schemes Leave Coinbase with a $400 Million Headache
The price of standing firm? Potentially astronomical. In an 8-K filing with the U.S. Securities and Exchange Commission, Coinbase estimated that remediation and customer reimbursements could range from $180 million to $400 million.
Coinbase CEO Brian Armstrong posted on X that some overseas customer service agents had been approached for months with bribes to leak customer info. That revelation forced the company to overhaul internal security, tighten its processes, and even relocate some support operations to slam the door on future insider scams.
Furthermore, this latest hit is just part of a brutal trend. According to blockchain security analyst ZachXBT, users lost around $45 million to phishing scams in the first week of May alone.
Coinbase has long been a favorite target. In 2024, it was the most impersonated crypto brand by scammers, and users are estimated to lose over $300 million annually to social engineering and phishing attacks.
Is Coinbase a Buy, Sell, or Hold?
Wall Street may not be shaken by the phishing scandal just yet. According to TipRanks, Coinbase holds a Moderate Buy rating from 23 analysts. Of those, 12 analysts rate the stock a Buy, while 11 sit firmly on Hold. No one has called for a Sell.
The average 12-month price target for COIN is $262.10, which suggests a modest 4.86 percent upside from the current price of $249.95. The range tells the real story. The highest target hits an optimistic $400.00, while the lowest sits at $169.00.
