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Coinbase CEO Brian Armstrong said in a social media post that
criminals had bribed some of the company’s customer service
agents who live outside the U.S. to hand over personal data on
customers, like names, dates of birth and partial social
security numbers.
“(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,” Armstrong said.
Social engineering is a popular hacking strategy, as humans tend
to be the weakest link in any network. Many large companies have
suffered hacks and data breaches as a result of such scams in
recent years.
Coinbase did not specify how many customers had their data
stolen or fell prey to social engineering scams. But the company
did pledge to reimburse any who did.
Coinbase shares fell 6% in trading around midday. The shares are
still up about 22% this month due to gains in bitcoin and other
cryptocurrencies.
In a filing with the Securities and Exchange Commission,
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 said that the company had, “in previous months,”
detected some of its customer service agents “accessing data
without business need.” Those employees had been fired, and the
company said it stepped up its fraud prevention efforts.
Coinbase said it received an email from the attackers on Sunday
demanding a ransom of $20 million worth of bitcoin not to
publicly release the customer data they had stolen.
Armstrong said the company was refusing to pay the ransom and
would instead offer a $20 million bounty for anyone who provided
information that led to the attackers’ arrest.
“For these would-be extortionists or anyone seeking to harm
Coinbase customers, know that we will prosecute you and bring
you to justice,” Armstrong said. “And know you have my answer.”
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