$400M Vanishes in Coinbase Insider Phishing Heist—Crypto’s ’Trustless’ System Strikes Again

Coinbase reels after a sophisticated insider phishing attack drains $400 million—exposing the brutal irony of decentralized finance’s security gaps.

How it happened: Attackers bypassed multi-factor authentication by targeting employees with eerily precise phishing lures. The breach unfolded over weeks, with funds siphoned to untraceable wallets.

The fallout: While Coinbase vows to make affected users whole (using those precious reserve funds we’re all suddenly so fond of), the incident highlights crypto’s dirty little secret—the human element remains the weakest link.

Silver lining? At least this wasn’t another ’rug pull’—just good old-fashioned fraud, the kind Wall Street perfected decades ago.

Inside Support Team Access

According to Coinbase, a handful of customer‑support contractors were offered bribes to tap into internal tools. They used their access to pull out names, email addresses and limited transaction records. Only a small slice of users were affected. But even a minor leak can fuel more scams. Criminals often use stolen information to target victims with custom tricks.

Coinbase Says It Won’t Give In

Based on reports, the hackers demanded 20 million dollars’ worth of Bitcoin to keep silent. But, Coinbase made it clear: it would not pay that kind of money. Instead, the company announced a $20 million‑dollar bounty for anyone who helps nail those behind the plot. That move flips the script. It puts the spotlight on the crooks and turns them into the hunted rather than the hunters.

Coinbase also revealed that it plans to set aside between $180 million and $400 million. That cash will cover payouts to people who got tricked by phishing scams. In 2024 alone, the exchange was the most impersonated brand in crypto, making phishing calls and fake emails a constant headache. Users who lost funds to those scammers will get their money back under Coinbase’s program.

Indeed there’s a lot of Coinbase user thefts I posted tied to the group pic.twitter.com/HVO4ENjZ4f

— ZachXBT (@zachxbt) May 15, 2025

Blockchain watcher ZachXBT has been raising alarms about phishing costs. He pegged the loss at around $45 million in just one week before May 7. On top of that, he estimates that scams drain over $300 million every year from Coinbase customers. Those numbers show how big the problem has grown. It also explains why Coinbase is committing hundreds of millions to fight back.

Looking ahead, Coinbase says it will tighten data controls and MOVE parts of its support work to new locations. It will also step up staff checks and vetting before agents get access to live systems. On top of that, the exchange aims to boost its fraud‑monitoring tools. Users can expect more alerts when unusual activity shows up on their accounts.

Featured image from ESET, chart from TradingView