Crypto exchange Coinbase’s CEO Brian Armstrong announced on social media that an ex-employee had been arrested in India, with the update coming months after the company disclosed a security breach in which customer data was stolen.
Armstrong thanked the Hyderabad Police in his message, but did not provide detailed information about how the arrested individual was linked to any past security incidents at Coinbase.
“We have zero tolerance for bad behavior and will continue to work with law enforcement to bring bad actors to justice. Thanks to the Hyderabad Police in India, an ex-Coinbase customer service agent was just arrested. Another one down and more still to come,” posted Armstrong on December 26 on X.
On May 15, Coinbase disclosed that cyber criminals “bribed and recruited a group of rogue overseas support agents” to steal customer data and target them directly, in what is known as a social engineering attack.
Per the same filing, the breach occurred in December last year and was discovered in May this year, with “insider wrongdoing” being cited as the category.
“Criminals targeted our customer support agents overseas. They used cash offers to convince a small group of insiders to copy data in our customer support tools for less than 1% of Coinbase monthly transacting users. Their aim was to gather a customer list they could contact while pretending to be Coinbase—tricking people into handing over their crypto. They then tried to extort Coinbase for $20 million to cover this up. We said no,” said Coinbase in a statement in May, noting that wallets, login credentials, 2FA codes, private keys, and hot/cold wallets were not compromised.
This is not the first time Coinbase has faced security issues due to the conduct of its employees.
In May 2023, the U.S. Securities and Exchange Commission (SEC) announced that former Coinbase product manager Ishan Wahi and his brother Nikhil Wahi had agreed to settle insider trading charges related to crypto asset securities that were intended to be made made available for trading via Coinbase.
More information is expected from the Indian police authorities.