TLDR
- Coinbase knew about a customer data breach at outsourcing firm TaskUs as early as January but didn’t disclose it publicly until May 14
- A TaskUs employee in India was caught photographing customer information with her personal phone and selling it to hackers for bribes
- The breach affected approximately 70,000 users and could cost Coinbase up to $400 million
- Over 200 TaskUs employees were terminated in mass layoffs following the incident discovery
- Coinbase rejected a $20 million ransom demand from hackers who threatened to leak customer data
Coinbase learned about a customer data breach at outsourcing partner TaskUs in January. The company waited four months before making the breach public through an SEC filing on May 14.
The breach involved a TaskUs employee based in India who was discovered taking photographs of sensitive customer information displayed on her work computer. She used her personal phone to capture the data.
According to sources familiar with the matter, the employee and a suspected accomplice were selling Coinbase customer information to hackers in exchange for bribes. The scheme was uncovered by company investigators who briefed multiple employees about the incident.
The breach potentially affects around 70,000 Coinbase users. The company estimates the total cost of the incident could reach $400 million.
TaskUs, the outsourcing firm involved, experienced mass layoffs shortly after the breach was discovered. More than 200 employees were terminated in January, though sources indicate only two employees were directly connected to the data theft.
The layoffs caught the attention of Indian media outlets. Former TaskUs employees confirmed that company leadership briefed staff about the security incident during this period.
The Ransom Demand
Hackers who obtained the customer data made ransom demands to Coinbase. The criminals requested $20 million in exchange for not releasing the stolen information publicly.
Coinbase rejected the ransom payment. The company chose not to pay hackers for their silence after customer data began appearing online.
The breach disclosure came through Coinbase’s SEC filing, which attributed the incident to “support agents overseas.” The filing provided the first public confirmation of the security problem.
Legal Action and Previous Issues
A federal lawsuit filed in Manhattan on May 27 named TaskUs in connection with the breach. The legal action provided additional details about the outsourcing firm’s role in Coinbase’s customer support operations.
TaskUs has faced similar issues before. The company was sued in 2022 over another crypto-related breach involving Ledger hardware wallets and Shopify.
That previous incident exposed personal data of hardware wallet owners. Many of those users continue to receive phishing scams as a result of the data exposure.
The Ledger breach highlighted ongoing security challenges with third-party vendors in the cryptocurrency industry. Companies often rely on outsourcing firms for customer support and other operations.
Current Stock Performance
Wall Street analysts maintain a generally positive outlook on Coinbase stock despite the breach revelations. Twenty-three analysts have issued ratings over the past three months.
The consensus rating is Moderate Buy, with eleven Buy recommendations and twelve Hold ratings. No analysts currently rate the stock as a Sell.
The average price target stands at $261.43, representing approximately 6% upside from the recent trading price of $246.72. Analysts appear focused on Coinbase’s core business fundamentals rather than the data breach incident.
Coinbase severed ties with the TaskUs agents involved in the breach and implemented tighter security controls for third-party vendors.
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