- A Coinbase user lost $96,000 due to account draining after an SMS prompt message.
- Coinbase denies responsibility for failing to flag several unauthorized transactions.
- Base blockchain might include transaction monitoring, says Brian Armstrong.
Crypto investor Jared Ferguson from New York filed a lawsuit against Coinbase in May 2022, when the victim’s account credentials were lost due to a security breach. The hacker drained the plaintiff’s Coinbase account 24 hours after Ferguson received a text message prompting him to change the password.
At the same time, Coinbase failed to blow the whistle on multiple unauthorized transactions during the period, causing Ferguson’s life savings of $96,000 to go down the tubes. The victim says Coinbase should bear responsibility for missing unauthorized transactions on both Federal and State Laws.
Coinbase Proclaims Innocence, Blames User in Email
Coinbase sent an email to the unfortunate customer saying, “please note, you are solely responsible for the security of your email, your passwords, your 2FA codes, and your devices.”
However, the plaintiff begs to differ, as his account password was changed from a different IP address and a new device. Coinbase failed to flag the transactions as suspicious, while the victim managed to regain access to the account the next day, only to see multiple zeros.
In addition, Coinbase refused to reimburse a client in a similar situation in 2021, when a user lost a considerably smaller sum of $7,500 due to a SIM Swap hack.
Arguably, unethical practice like this often makes Coinbase customer support the roasting target of Crypto Twitter, but it also took a toll on its stock price. At press time, Coinbase Global Inc (COIN) costs $62.77, with a 2.7% decline in the last 24 hours.
Beyond that, Coinbase just launched Base Layer-2 blockchain, while Brian Armstrong intends to apply transaction monitoring in compliance with the regulators. The move can help lay the foundation for clear rules between the customer and the crypto platform in disputable situations.
On The Flipside
- While preaching decentralization, Coinbase CEO Brian Armstrong is likely to implement transaction monitoring for Anti-Money Laundering measures in the newly-launched Base blockchain.
- The American Coinbase founder has been a strong proponent of crypto regulation and has an ongoing altercation with Gary ‘Top Cop’ Gensler and the U.S. Securities and Exchange Commission (SEC).
- While one of Brian Armstrong’s trademark blogs is named “Coinbase does not list securities. End of story,” the SEC Chair Gary Gensler claims that “everything except Bitcoin” should be regulated as securities.
Why You Should Care
Coinbase Global is among the leading names in crypto CeFi. The quality customer service support at Coinbase should be considered a priority, as the company doesn’t have physical headquarters.
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