Coinbase Data Breach Will Lead to People Dying, TechCrunch Founder Says

I used to work at Vanguard, which has significantly more assets under management than Coinbase. Vanguard had special categories for people with a lot of assets, high net worth, ultra-high net worth, etc for people that had over $10M and $100M (iirc) in assets under management at Vanguard. Because its a traditional finance company all of the client information was stored (name, phone, address, email, etc). Now it was basically impossible for any employee to get access to this information without needing it. Even working in the tech side I could not just log into the DB and run a query for people's information, make trades, etc. Everything was logged, everything was tracked, and access was very specifically restricted to limit issues.

My point here is that Coinbase (blaming this on a "overseas" employee) and the TechCrunch founder are missing that traditional finance companies have already solved these issues. They are just immature and not serious companies.

Some of the quotes in the article try to blame some of the harm from Coinbase's data breach on "know your customer" regulations. It's such self-serving nonsense.

Society is within its rights to demand that financial institutions both (1) protect their customers' sensitive personal information and (2) fight money laundering, which AFAIK is impractical without KYC rules at institutions like Coinbase that connect crypto to the traditional monetary system.

The linked article leans hard into blaming KYC, when clearly improper data handling and security by Coinbase is the true cause. This is something we've seen repeatedly with crypto exchanges: Abysmal data protections and security. Wealth is not new, and financial institutions have managed this information fine. There is an issue specifically in the crypto space with poor security practices.

Of course the tech industry's solution to the problem is to spend tens of millions in lobbying to get rid of the KYC regulation, rather than a few bucks upgrading their security systems to what banks of had for several decades.