Justice Department Opens Investigation into Coinbase Data Breach Involving Employee Bribery

The U.S. Justice Department has launched an investigation into a significant data breach at Coinbase, the largest cryptocurrency exchange in the United States, according to Bloomberg. The probe, which involves the department’s criminal division in Washington, is examining the circumstances of the breach, where hackers allegedly bribed employees and contractors in India to access sensitive customer information.

The investigation aims to uncover the full scope of the incident and hold those responsible accountable. A Justice Department spokesperson declined to comment on the ongoing investigation, and a Bloomberg source requested anonymity due to the sensitive nature of the matter.

Coinbase disclosed the breach in a recent filing, revealing that hackers employed a sophisticated social engineering attack. Unlike traditional cyberattacks that exploit software vulnerabilities, this breach relied on manipulating individuals to gain unauthorized access to internal systems. The company stated that criminals targeted customer support agents, primarily based outside the U.S., to extract client data from its systems.

In the months leading up to the incident, Coinbase detected suspicious activity involving these agents, who were subsequently terminated. On May 11, the company received an anonymous email from the hackers demanding a $20 million ransom to suppress the stolen data. Coinbase has estimated that resolving the breach could cost up to $400 million, a figure that underscores the severity of the incident.

Coinbase’s Response and Cooperation with Authorities

Paul Grewal, Coinbase’s chief legal officer, emphasized the company’s commitment to addressing the breach. He noted that Coinbase is actively collaborating with the Justice Department and other U.S. and international law enforcement agencies to support the investigation. The company has also notified affected parties and is working to ensure that those responsible face criminal charges.

Coinbase’s proactive stance reflects its efforts to maintain trust with its user base while navigating the fallout from the breach. The investigation highlights the growing challenges faced by crypto exchanges as they contend with increasingly sophisticated cyber threats. As the Justice Department continues its probe, the outcome could set important precedents for how such incidents are handled in the future.