• Coinbase user lost $96,000 from an SMS prompt message initiated security breach.
• Coinbase denied responsibility for failing to flag several unauthorized transactions.
• Brian Armstrong plans to apply transaction monitoring in compliance with regulators.
Coinbase User Loses $96,000
A Coinbase user lost $96,000 due to account draining after a text message prompted them to change the password. The hacker drained the plaintiff’s Coinbase account 24 hours after they received the text message prompting them to change the password and Coinbase failed to blow the whistle on multiple unauthorized transactions during this period.
Lawsuit Filed Against Coinbase
Crypto investor Jared Ferguson filed a lawsuit against Coinbase in May 2022 for not noticing multiple suspicious transactions and allowing his life savings of $96,000 be stolen by a hacker. He argues that according to Federal and State Laws, Coinbase should bear responsibility for missing these unauthorized transactions.
Coinbase Refuses Responsibility
Coinbase sent an email saying that “the customer is solely responsible for the security of their email, passwords, 2FA codes and devices” but Ferguson disagrees as his account password was changed from a different IP address and device. Furthermore, in 2021 another user faced a similar situation where they lost $7,500 due to a SIM Swap hack yet Coinbase refused to reimburse them as well.
Impact of Unethical Practice
This unethical practices has caused outrage on Crypto Twitter with many people roasting Coinbase customer support but also had an impact on its stock price which has decreased by 2.7% in the last 24 hours (at press time).
Brian Armstrong Plans Transaction Monitoring
In addition, Brian Armstrong plans introducing Base Layer-2 blockchain combined with transaction monitoring in order to comply with regulators and prevent similar situations from occurring again.