In a significant development for the cryptocurrency sector, Indian law enforcement has arrested a former Coinbase customer service representative in Hyderabad. This action is related to a data breach that compromised the sensitive information of nearly 70,000 users. According to Coinbase CEO Brian Armstrong, the breach was first disclosed earlier this year and has since raised notable legal and security concerns for the exchange.
The breach reportedly began in December 2024 and involved a bribery scheme aimed at offshore customer support personnel. Cybercriminals allegedly incentivized customer service agents to access Coinbase”s internal systems, extracting critical user data such as names, addresses, phone numbers, and government-issued identification. The Coinbase filing with the Maine Attorney General”s Office confirmed that 69,461 users were impacted.
In a bold move, Coinbase declined to pay a ransom demand of $20 million from the attackers. Instead, the company initiated a bounty program aimed at encouraging the public to provide information leading to arrests and asset recovery. A follow-up investigation by Fortune connected the incident to employees of TaskUs, a Texas-based outsourcing firm that operates in India. This investigation identified two employees allegedly recruited for a broader criminal operation targeting various service providers associated with Coinbase.
Armstrong reiterated the company”s commitment to upholding integrity, stating, “We have zero tolerance for bad behavior and will continue to work with law enforcement to bring bad actors to justice.” The arrest in India comes on the heels of another legal case in the U.S., where prosecutors charged a Brooklyn man with running a phishing scheme that defrauded approximately 100 Coinbase users out of $16 million.
As part of the fallout from this breach, Coinbase reported $307 million in costs associated with breach remediation in its second-quarter earnings. These expenses included reimbursements to affected customers and further measures to bolster their security protocols. The ongoing challenges have also led to a class-action lawsuit from shareholders, claiming that the exchange failed to promptly disclose the breach.
Despite the challenges, Coinbase remains a prominent player in the cryptocurrency market, although its shares experienced a slight decline of about 1.2%, settling at $236.90 on the last trading day. The situation continues to evolve as law enforcement in India has not yet released an official statement regarding the arrest.
