Coinbase Shares Drop 7% Due to Hacking and SEC Investigation... "Market Reaction is Overblown"
Summary
- Coinbase's stock fell 7% due to a hacking incident and SEC investigation, but it is assessed as a one-time issue rather than a structural risk.
- Barclays and Oppenheimer stated that the hacking was due to social engineering attacks, not technical flaws, and that the stock price weakness is a buying opportunity.
- Coinbase plans to fully compensate affected customers and reported that no customer assets or passwords were leaked.
Coinbase's stock price has fallen by more than 7% due to a customer data breach hacking incident and a renewed investigation by the U.S. Securities and Exchange Commission (SEC), with some analysts suggesting that the market reaction is overblown.
According to CoinDesk, a cryptocurrency-focused media outlet, on the 16th (local time), major investment firms such as Barclays and Oppenheimer have assessed that "the current sell-off is an overreaction to a one-time issue rather than a structural risk." Coinbase's stock experienced an intraday drop of up to 9% due to the hacking incident coupled with the SEC investigation.
Barclays stated, "This hacking incident is unrelated to blockchain security and is a case where outsourced customer support personnel leaked internal information for monetary gain," adding that it was "an incident caused by social engineering attacks rather than technical flaws." Hackers reportedly used leaked names, addresses, and masked social security numbers to deceive victims and induce cryptocurrency transfers.
Recently, Coinbase announced that it rejected the hackers' demand for a $20 million ransom and plans to fully compensate affected customers. It explained that less than 1% of all users were actually impacted, and no passwords, private keys, or customer assets were leaked.
Oppenheimer commented, "While this incident is a blow to the company's image, it is an isolated event unrelated to the overall security vulnerability of the system," and analyzed that "the current stock price weakness is rather a buying opportunity." Coinbase plans to establish a compensation and legal cost fund of up to $400 million and a bounty program for the capture of the perpetrators related to this incident.
The media added, "The SEC is examining the appropriateness of the '100 million verified users' figure listed in the securities registration statement (S-1) submitted by Coinbase ahead of its 2021 initial public offering (IPO)."
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.![[Market] Bitcoin breaks below $70,000… Korea premium at 0.31%](https://media.bloomingbit.io/PROD/news/74018332-717e-4495-9965-328fe6f56cb4.webp?w=250)
