TechCrunch Founder Claims Lives Will Be Lost In Coinbase Data Breach

At least that's the line of thinking of Michael Arrington, co-founder of TechCrunch. Arrington is an investor in Coinbase, and posted a scathing X rant stating that, although he's a champion of the crypto exchange, he's "very disappointed" about the events, criticizing the exchange for "using the cheapest option for customer service." We believe he's referring to the fact that the leak was performed by the hand of external, non-US contractors and support staff. The leaked data didn't include any private keys, but it included everything else, including emails, phone numbers, SSINs, home addresses, and government IDs. The SEC filing with all the gory details can be found here.

The additional context for Arrington's statement is that according to Decrypt, there's been an uptick in kidnappings (or attempts) of high-value crypto holders, including some vicious ones with literal digits being traded for private key digits. Given the seriousness of this particular type of data breach, Arrington believes that head execs of companies who have their data stolen should be looking at jail time, as an implicit incentive towards much stronger security and personnel vetting.

Coinbase's response to the data leak has been mostly good. First, the positives: the exchange didn't accept the $20 million ransom the attackers demanded, and instead posted a $20 million reward for information leading to their capture. Next, it dutifully reported the data breach to the Maine Attorney General's office. Finally, it pledged to reimburse customers who were tricked into sending funds to robbers, thanks to their information leaking.

So far so good, but Coinbase also tossed blame at the KYC (Know Your Customer) verification requirement to collect data information and government ID. While we're huge fans of privacy and not doling out personal information unless needed, this sounds like a bank blaming customers for having their money that was stolen. That obviously doesn't make much sense.