Coinbase got hit with a tidal wave of lawsuits. Six separate suits, all in the span of two days, May 15 and 16.3 Why? Because they dropped the ball big time on protecting their users’ data.
And when things went south, their response? Let’s just say it wasn’t exactly a masterclass in crisis management.
Security issues at the crypto exchange
Coinbase revealed on May 15 that a cybercriminal crew bribed some of their own customer support agents to get into their systems.
The hackers demanded a $20 million ransom, which Coinbase refused to pay. But the damage was done.
The thieves walked away with sensitive info, like names, addresses, phone numbers, emails, parts of Social Security numbers, bank details, driver’s licenses, passports, and even bits of account data like balances and transaction history. That’s a treasure trove for identity thieves.
One of the lawsuits says Coinbase failed to put in place reasonable security safeguards, leaving millions of users exposed to serious and ongoing risks.
And it gets worse, the suit claims Coinbase’s reaction was a mess, slow, patchy, and half-baked.
Users weren’t told quickly or clearly about the breach, and Coinbase didn’t jump in with solid protections or guidance to stop the fallout.
Who guard the guards?
Think about it, your personal info, out there in the wild, vulnerable to identity theft and financial fraud.
And once this stuff leaks, it’s not like you can just hit undo. The consequences could haunt people for years, maybe forever.
Other lawsuits echo these complaints. Some even accuse Coinbase of unjust enrichment, basically saying, hey, you made a ton of money but didn’t spend enough to keep our data safe.
One suit from California wants Coinbase to wipe all sensitive data they hold on plaintiffs and bring in outside security experts to audit their systems.
Makes sense, right? If you can’t trust the gatekeepers, you want someone else checking the locks.
Indian scammers in the system?
Coinbase hasn’t directly responded to the lawsuits but pointed people to a blog post explaining the breach.
They confirmed they fired the shady support agents in India involved in the scam and plan to reimburse users who got tricked into sending crypto to scammers because of this mess.
But brace yourself, the bill for reimbursements could run between $180 million and $400 million, according to their SEC filing.
And the stock market? Coinbase shares took a hit, dropping 7% to $244 after the breach news and ongoing SEC probe over misstated user numbers. But don’t count them out just yet, the stock bounced back. A little.
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