Victims of Crypto Scammers Demand Coinbase Be Held Accountable for Losses

Almost 100 victims of crypto scams are trying to hold trading platform Coinbase responsible for their losses over the past year, which reportedly involve thousands of people losing tens — if not hundreds — of millions of dollars in cryptocurrency. Scammers allegedly took money out of people’s accounts, which are managed by the Coinbase app.

Now, nearly 100 people are trying to fight back, filing an arbitration demand against Coinbase, alleging the company failed to protect them, adding that they begged it to fix software bugs that allowed them to unknowingly give scammers access to their accounts, according to a report by Washington Post.

The victims say they lost a combined more than $21 million, with many of them losing their life savings, the report adds.

Eric Rosen, a lawyer at Roche Freedman who represents some 96 victims, said that Coinbase is “trying to be a financial institution without the infrastructure to back it up.”

“There were no procedures in place to stop these frauds,” Rosen added. “Of course, scammers quickly picked up on this, and directed victims to download the Coinbase Wallet.”

The arbitration demand reportedly says that rules mandating banks to reimburse debit card users for unauthorized transfers also should apply to Coinbase’s customers.

Coinbase spokeswoman Lisa Johnson responded to the demand, stating that the company is “committed to protecting its customers from scams, fraud, and other crimes and has invested significant resources in protecting users against liquidity mining scams.”

“A customer’s activities on Coinbase Wallet, including managing the wallet’s private security keys and access to the wallet’s contents, are exclusively controlled by the customer, not Coinbase,” Johnson added.

The victims reportedly met their scammers through social media, dating apps, or texts in which the crooks pretended to be messaging the wrong number.

The scammers would then get the victims to buy what they believed was a “mining certificate” through a prompt in Coinbase Wallet. The certificate wasn’t real, and the process did not actually involve making a payment.

Clicking on the fake certificates ended up recording a single line of computer code that granted scammers permission to steal crypto that would be later deposited into an account.

Recently, Coinbase modified the warnings displayed in its wallet app, Washington Post noted. It now shows that a website is requesting permission to withdraw a huge sum of dollars from an account.

A wallet application inside the company’s main app, however, still appears to be vulnerable, the report adds.

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