U.S. DOJ Probes Data Breach at Major Crypto Exchange Coinbase

The U.S. Department of Justice has launched a formal investigation into a security breach that led to the unauthorized disclosure of personal information stored by Coinbase—one of the nation’s leading digital asset exchange platforms.

A source cited by Bloomberg says the probe is focused on the details of the breach, with U.S. and Indian users among the most affected. Coinbase’s legal department, headed by Chief Legal Officer Paul Grewal, has stressed that the exchange itself is not under investigation. The company is cooperating with authorities and has already fired all Indian employees and contractors suspected of involvement following an internal investigation.

“We have notified and are working with the DOJ and other US and international law enforcement agencies and welcome law enforcement’s pursuit of criminal charges against these bad actors.”

Coinbase Hack: What Went Wrong

The attackers didn’t break through Coinbase’s digital defenses. Instead, they manipulated insiders using social engineering. Coinbase confirmed that the hackers tried to bribe employees and contractors to access internal systems and obtain personal user information—names, contact details, and ID scans.

The first sign of the hack came on May 11, when the attackers demanded a $20 million ransom from Coinbase. The company acted fast, reporting everything to law enforcement and avoiding accusations of covering up the breach. Despite this, the DOJ’s criminal division is still in charge of the case—and Coinbase has already shared evidence of bribery connected to the attack.

Check this out: How Is a Cryptocurrency Exchange Different from a Cryptocurrency Wallet?

• The U.S. government investigation is expected to last for months, according to analysts.
• In parallel, UK and Irish data protection regulators launched probes shortly after Coinbase submitted its incident report.

Their focus: to assess potential violations of the GDPR and national cybersecurity legislation, and to evaluate the grounds for possible enforcement actions.

Coinbase Faces Up to $400M in Breach-Related Costs

Preliminary figures suggest Coinbase could incur as much as $400 million in direct costs tied to the breach. This total includes:

• restitution to affected customers,
• cybersecurity investments,
• legal fees.

What’s more, some insurers might refuse to cover damages if the company is found to have been negligent.

Analysts emphasized that reputational damage may prove more lasting than immediate financial losses. If investor and user confidence falters, Coinbase’s stock—which recently entered the S&P 500—could face increased volatility and downward pressure.

Cybersecurity professionals warn that to avoid future hacks, platforms need to stay proactive—by auditing their systems regularly, requiring multi-factor authentication, and keeping tight control over who gets access inside the company.

Read on: WhiteBIT’s Cybersecurity Tips