Coinbase Stock Rebounds 7% Amid Cyberattack and SEC Probe

The world’s largest publicly listed crypto exchange, Coinbase, has been rocked by a damaging cyberattack and continued investigation from its SEC lawsuit just days before its S&P 500 debut. The back-to-back setbacks led to a drop in the Coinbase stock price on May 15, but the stock has rebounded in May 16’s trading session. 

Coinbase Stock Rebounds 7%

The one-two punch of the Coinbase cyber attack and the SEC investigation sent COIN shares tumbling, even as the exchange is poised to join the S&P 500 index next week. This milestone was expected to bolster credibility, but recent events overshadowed the narrative, which led to the crash. 

However, the stock has bounced back on Friday and is now up 7% since the start of today’s trading session. The stock, currently trading at around $262, is up over 50% in the last month and almost 6% year-to-date (YTD).

Coinbase Cyber Attack Hits Ahead of S&P 500 Entry

Coinbase confirmed a cyber attack that exposed customer data on Thursday and led to a ransom demand of $20 million, just days before the company is scheduled to join the S&P 500 index. The breach involved rogue overseas contractors bribed by hackers to access internal systems. 

CEO Brian Armstrong addressed the incident on X, revealing that hackers bribed Coinbase’s overseas support staff for access to internal tools. A small group of insiders gave in, leaking sensitive customer data like names, email addresses, birthdates, and home addresses.

Armstrong said,

“The attackers’ intent was to use the user’s personal information clandestinely, and to social engineer unique scams impersonating Coinbase support,”

Though passwords and crypto wallets were not compromised, attackers gained access to names, contact details, masked bank info, government ID images, and partial Social Security numbers.

Coinbase fired all employees involved and launched a $20 million bounty for information leading to the attackers’ arrest, vowing not to negotiate with the criminals. The CEO added that,

“Any customers that were socially engineered as a result of this incident, we’re going to reimburse them.”

Estimated costs from the incident may reach $400 million, covering customer reimbursements, legal risks, and tech remediation.

The hack had a direct impact on the Coinbase stock. But this was not the only mishap for Coinbase in the last 12 hours.

SEC Investigates Coinbase Over Inflated User Claims

Simultaneously, the SEC is investigating Coinbase over allegedly misleading user numbers in past disclosures. The probe, started under the Biden administration and continued under the Trump-era SEC, targets the company’s previous reporting of “verified users” topping 100 million.

Coinbase’s legal team argues the metric, discontinued over two years ago, was always disclosed as including anyone who verified an email or phone number. The company now focuses on “monthly transacting users” as a more accurate measure.

Chief Legal Officer Paul Grewal said, “This investigation should not continue,” but confirmed that Coinbase is cooperating with the SEC to resolve the issue.

✓ Share:

Coingape Staff

CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.