Coinbase Deals With Data Breach: $20 Million Reward to Find the Culprit

How did the leak happen?

According to Coinbase, the hackers tricked employees at its overseas customer support center into clicking on phishing links, thereby stealing sensitive information. Although no passwords, private keys, or wallet funds were compromised, the incident still caused an estimated $400 million in damage, largely due to loss of trust and remediation costs. Coinbase pledged to voluntarily compensate affected users and insisted that Prime accounts were not affected. However, the incident highlighted a vulnerability in outsourcing human resource management – ​​a weakness that hackers exploited.

How did Coinbase respond?

Instead of paying the ransom, Coinbase chose to take the bold step: offering a $20 million reward for information leading to the arrest and conviction of the perpetrators. This move not only demonstrates the exchange’s determination but also sends a strong message to the hackers. Coinbase’s CEO vowed to “pursue to the end” and apply the most severe legal measures. At the same time, the exchange is coordinating with law enforcement agencies to investigate and strengthen internal security, especially for outsourced support centers.

The incident is reminiscent of other large bounties in the crypto industry, such as Harmony Protocol ($1 million for the Horizon 2022 hack) or Arkham Intelligence ($46,000 for the FTX attack). However, Coinbase's $20 million bounty is one of the highest, reflecting the severity of the incident.

Comparison with other security incidents in the industry

The crypto industry is no stranger to data breaches and cyber attacks. Recently, Ledger suffered a Discord hack when hackers used admin accounts to spread fake links, shaking confidence in hardware wallets. Similarly, the Bybit hack in February 2025 caused the exchange to lose $1.46 billion in Ethereum from its cold wallets, making it the largest attack in crypto history. Compared to these incidents, Coinbase’s financial losses were smaller, but the impact on trust was significant, especially when the exchange serves millions of individual and institutional users.

BitGo, which recently received a MiCA license in the EU, is a contrasting example. It focuses on institutional security and has not recorded any major incidents, which has helped to strengthen its reputation. Coinbase, despite its custody product Coinbase Custody with $122 billion in assets (as of Q1/2021), has suffered from its image being tarnished by human errors. This shows that even the “big guys” are not immune to human risk.

What it means for the crypto industry and the future of Coinbase

The breach underscores the importance of security in the crypto industry, where trust is a vital factor. With Europe leading the way in regulation (63 banks dealing with crypto and MiCA), exchanges like Coinbase must raise their security standards to compete with companies like BitGo or Boerse Stuttgart Digital. The incident also exposes the risks of outsourcing human resources – a popular but exploitable model.

For Coinbase, the breach could hurt its individual user base, especially as FUD (fear, uncertainty, doubt) is spreading on social media. Some posts on X suggest that information is not being widely disclosed, raising questions about transparency. However, with the promise of large compensation and rewards, Coinbase is trying to regain trust. If handled well, they could turn the crisis into an opportunity to improve the system.

Has the crypto industry learned its lesson?

The Coinbase data breach is a wake-up call for the entire industry. With incidents like Ledger and Bybit continuing to occur, crypto companies need to invest heavily in security, from technology to people. Coinbase, as a leader, has the opportunity to set a new standard if it fixes it thoroughly. But if it doesn’t, it could lose market share to competitors who are using regulatory frameworks like MiCA to build trust. Will the $20 million bounty be enough to find the culprit and restore its reputation? Only time will tell.