Coinbase SEC Probe and Security Breach Unlikely to Derail Growth, Experts Say

Coinbase faces difficult weeks on multiple fronts, just days after becoming the first cryptocurrency company connect S & P 500 index.

On Thursday is the largest American crypto exchange discovered He suffered a breach of data involving an insider agreement and an attempt to blackmail Bitcoin of $ 20 million on May 11.

In the video published Online, executive director Brian Armstrong revealed that support agents accepted the bribe of criminals to leak sensitive user information, including names, addresses, partial information about bank and document information. Less than 1% of customers have been affected, Coinbase said.

The company also said it refused to pay the ransom and now offers a role in the amount of $ 20 million for answers information.

The violation has attracted sharp criticism of how much infrastructure in cryptocurrencies still depends on centralized, opaque systems that, according to the Phil Mataras, the founder of the permanent cloud networks based in Ar.IO, replicates the vulnerability of the Web2.

“When access and trust are concentrated in one organization, one mistake or insider threat can threaten millions,” he said Decipher.

“Systems must diminish the addiction to mechanisms based on confidence in distribution of control as default, making operations transparent and providing critical data cannot be quietly changed or lost,” he added.

Sec probe

Adding the company’s troubles, the same day brought fresh discoveries that the US Securities Commission and exchange explores whether Coinbase has seduced investors by exceeding the number of users in past applications.

Probe, first reported per New York Timesfocused on Coinbase’s claim in its iPo materials in 2021 that it had over 100 million “proven users”, which is the company that the company continued in marketing by 2022.

Coinbase has withdrawn the metric since then, saying in the 2023 application that this was not a reliable indicator of performance.

The company noted that some users may have made more accounts and that the stature included anyone who confirmed the E -State or telephone number.

Paul Grewal Director General described the probe as a “retention” from the previous administration.

“Although we firmly believe that this investigation should not continue, we are still dedicated to working with SEC to do so,” he added.

Renewed supervision comes shortly after SEC lowered A lawsuit accusing Coinbase for the illegal sales of token, signaling thawing in regulatory hostility under the cryptic-more favorable SEC President and Government Administration.

Coinbase repeatedly Parreo With the previous management of the SEC under Gary Gensler, criticizing his approach to the digital property as inconsistent and overly aggressive.

The exchange was also explored According to the DIP about the way the USDC revenue and its relationship with the publisher of Stablecoin, Circle, said Growwal said it was “completely resolved” in a statement last April.

The same month and the state of Oregon submitted A lawsuit against Coinbase, stating that the exchange has violated the law on state securities.

What experts think

However, experts say the probe cannot significantly affect the long-term coinbase trajectory. “Many companies have faced similar cases like these, and it lived to fight another day,” said Nick Cote, co -founder and director of Secondlane.

He compared the situation with Facebook’s fine of $ 100 million in 2019, and Twitter is a settlement of $ 800 million in 2024.

Legal expert Jack Graves, a professor of rights at Syracuse University, believes that the involvement of Coinbase S&P 500 probably wouldn’t have happened if the SEC probe would be serious threats.

“I think the breach of data is significant, especially if you consider the history of this industry,” he said. “However, if there is more an investigation by sec than the presented here, I could change my mind.”

Other crypto insiders were even more rejected.

Peter Chung from the Prego Labs called Times Report “Hit Piece”, saying Decipher This cryptocurrency is a new industry and is therefore the best practice that a reliable metric for Crypto Exchange users has not been firmly determined.

“Coinbase seems to have voluntarily changed the reported metric after realizing that the initial figure was a misconception, he said.” This is not enough to claim that they have acted in bad faith and deserve to be punished by the market. “

Coinbase claims that the metric in question was fully discovered and appropriately contextualized in its subtitles and that the focus switched to significant indicators such as monthly users who began in 2023.

The company characterized the probe Decipher As an inherited matter of the previous management of the Sec’s, she said she was still working with regulators.

Edited Sebastian Sinclair