Hacked Coinbase User Sues Crypto Exchange for $96,000 in Lost Life Savings

  • A Coinbase user is suing the exchange to recover 90% of his life savings that he says was stolen from him, the lawsuit claims.
  • The user said that Coinbase will not pay him and it sees the violation as his problem.
  • But the exchange ignored several red flags for fraud, he alleged in his claim for triple damages.

A Coinbase customer says he lost $96,000 in a phone hack — and now he’s suing the US’s largest cryptocurrency exchange after being told the breach was his problem.

In his lawsuit filed on Monday, New York resident Jared Ferguson said 90% of his life savings were wiped out by the platform in a security breach through his phone.

Hackers drained crypto from Coinbase’s platform within eight hours of tricking his mobile service provider into handing over control of his phone number, according to the filing.

But the exchange said it would not pay Ferguson and said in an email that customers are responsible for any activity that occurs if devices or passwords are compromised, according to the suit.

“Coinbase’s email disclaims any responsibility for the hacking of its customers’ accounts,” the filing read.

“Please note that you are solely responsible for the security of your e-mail, your passwords, your 2FA code, and your devices,” the exchange said, according to the filing.

Ferguson said his carrier told him in May that it had received a request to change the SIM card, which he had not done. He discovered the Coinbase theft the next day when he restored service on his iPhone.

Scammers using SIM swap fraud take advantage of 2-factor authentication (2FA), where banks and other service providers send a text message to their customer’s phone to confirm activity on an account. They get a carrier to activate a SIM card in a new device for the customer’s number, allowing them to pass all the checks.

In his complaint, Ferguson said he immediately contacted the exchange to report the hack, but said its procedures fell short by failing to alert on clearly fraudulent and unauthorized transactions.

The exchange ignores several red flags for fraud during the theft, he said, such as using a new device and resetting the password, and that it does not use facial recognition. he put in place.

“Coinbase’s willful blindness to the numerous fraud badges contained herein constitutes bad faith acceptance of unauthorized payment orders,” the lawsuit says.

This is not the first time that Coinbase has seen complaints from customers who lost money in their accounts in a SIM swap scam. An Indiana man lost $7,200 from his account in 2021 but failed to recover his money, CBS reported, saying it had been reporting similar Coinbase hacks for months.

“Our world-class security team takes multiple security measures to ensure our customer accounts remain safe. Coinbase also encourages customers to take steps to secure their personal accounts and information outside of Coinbase,” the company said in a statement to Insider.

Ferguson is seeking a full refund plus interest, statutory and punitive damages, including triple damages.

This story was updated at 11:27 a.m. ET on March 8 to include a comment from Coinbase.

Leave a Comment