Coinbase Stock Plummets Amid Cyber Attack and SEC Investigation
Coinbase’s shares (COIN) saw a decline of over 8% on Thursday following two significant events that raised concerns regarding the company’s regulatory management and operations.
Firstly, the cryptocurrency exchange reported that attackers had breached its systems, stealing sensitive customer information and threatening to release it unless a ransom of $20 million was paid.
Additionally, a report by the New York Times indicated that the SEC is currently investigating whether Coinbase inaccurately reported user data in the past.
Despite the breach, Coinbase assured that no passwords or private wallet codes were compromised and that less than 1% of its active users were affected, as noted in a blog post by the company.
Coinbase’s chief legal officer, Paul Grewal, commented on the SEC investigation, describing it as a leftover inquiry from the previous administration related to a metric that has not been reported in over two years. He emphasized the company’s commitment to resolving this issue with the SEC.
These incidents represent an unexpected challenge for Coinbase, the largest cryptocurrency exchange in the U.S., following a series of recent successes, including a notable acquisition of the Deribit exchange for $2.9 billion, and the announcement of its addition to the S&P 500 index.
In response to the hacking incident, Coinbase CEO Brian Armstrong stated on social media that instead of paying the ransom, the company will initiate a $20 million reward program to gather information about the attackers. The estimated cost of addressing this breach could range between $180 million to $400 million, predominantly for the reward program and to compensate affected customers.
