Coinbase Acknowledges DOJ Probe After Significant Security Breach

The Department of Justice (DOJ) in the United States has launched an inquiry into a major security incident that occurred at Coinbase, the leading cryptocurrency exchange in the country.

Sources familiar with the situation, referenced by Bloomberg, report that the criminal division of the DOJ in Washington, D.C., is investigating the details of the breach, which has sparked significant alarm regarding cybersecurity practices in the cryptocurrency industry.

Coinbase Partners with DOJ Following Significant Data Breach

Coinbase revealed that the breach involved illicit actors bribing staff and contractors in India to access confidential client information. Paul Grewal, the company’s Chief Legal Officer, remarked:

We are cooperating with the DOJ and various US and international law enforcement organizations, and we support their efforts to bring those responsible for these crimes to justice.

Crucially, the CLO emphasized that while Coinbase itself is not being investigated, the attention of the DOJ is directed towards the perpetrators of the breach.

The breach was first identified when Coinbase received a communication from an unknown threat actor on May 11, claiming to have information regarding specific customer accounts and internal documents. The exchange expects to incur losses between $180 million and $400 million as a result of the cyber event.

$20 Million Reward Fund Established After Ransom Demand

Although the attackers successfully accessed some data, including personal identifiers such as names, addresses, and email addresses, Coinbase confirmed that no login credentials or passwords were compromised.

In a statement released on May 15, Coinbase reassured its clients through the social media platform X (previously Twitter) that it would not fulfill the attackers’ ransom demands. The ransom was set at $20 million.

Rather than capitulate to the ransom, Coinbase announced the creation of a $20 million reward fund aimed at incentivizing information that could lead to the apprehension and prosecution of those behind the attack.

By the end of trading on Monday, Coinbase’s stock (COIN) was valued at $263.