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Coinbase-Posing Scammers Steal $1.7M from a User Amid a String of Attacks

ByDayne Lee

Jul 9, 2024

Coinbase-Posing Scammers Steal $1.7M from a User Amid a String of Attacks

At least three Coinbase users and one additional crypto user have reported being targeted by scammers impersonating Coinbase representatives in the past week, with one victim losing a staggering $1.7 million.

Major Scam Incidents

On July 7, Tegan Kline, co-founder of Edge & Node, shared on X a detailed account from a “good friend” who had their self-custody wallet drained of $1.7 million after being deceived by a scammer. The scammer tricked the victim into sharing part of their seed phrase.

The victim recounted that the scammer called claiming to be from Coinbase’s security team. They sent an email that appeared to be from Coinbase, verifying that the victim was “speaking to an official representative at Coinbase.” The scammer alleged that the victim’s wallet was “connecting directly with the blockchain,” causing unauthorized transactions. They then sent another email, seemingly from Coinbase, showing an outgoing transaction.

The scammer directed the victim to a website to enter their seed phrase to stop the transactions. Despite knowing this was unsafe, the victim entered “a portion” of their seed phrase without submitting it fully. Hours later, $1.7 million was drained from their wallet.

Hiro Systems CEO Alex Miller explained that such websites capture data as it is entered, even without submission. He noted that the partial reveal of the seed phrase was likely enough for the attackers to brute-force the rest. Miller himself was recently contacted by a scammer using a similar approach. He believes his information may have been leaked from CoinTracker’s email service provider database in 2022.

“Specifically, they were using the Coinbase API key connected to CoinTracker to verify that they were me (in addition to other info),” Miller said. He advised, “At the very least cycle your API keys if you have been using CoinTracker.”

Other Reported Scams

On July 3, X user “TraderPaul04” reported a sophisticated social engineering attempt by a scammer posing as a Coinbase representative. The scammer claimed there was a login attempt on their account from a different city. An American male, claiming to be a Coinbase employee, stated TraderPaul’s full name and confirmed their email before alleging to have temporarily locked their Coinbase account. They sent a fake password reset link to steal the account password. Suspicious, TraderPaul insisted on calling Coinbase customer service directly, which caused the scammer to hang up.

On July 7, another X user, “beanx,” shared a similar experience of receiving a call from a fake Coinbase representative claiming “someone attempted to login to my Coinbase.”

Cointelegraph reached out to Coinbase for comment but did not receive an immediate response. The rise in these sophisticated scams highlights the pressing need for enhanced security measures and greater user awareness in the crypto community.

According to reports, approximately $1.19 billion was lost to crypto security incidents in the first half of 2024. Over $900 million of these losses were due to phishing attacks and seed phrase compromises.

DateVictimMethod of AttackReported Loss
July 3TraderPaul04Phone call, fake password reset linkNo financial loss reported
July 7AnonymousPhone call, fake email, seed phrase partial reveal$1.7 million
July 7Alex MillerPhone call, Coinbase API verificationNo financial loss reported
July 7BeanxPhone call, fake login attempt alertNo financial loss reported

Recommendations for Crypto Users

In light of the increasing frequency and sophistication of these scams, several security measures are recommended for crypto users:

  • Never Share Seed Phrases: Never share your seed phrase, even partially, with anyone.
  • Verify Contact Legitimacy: Always verify the legitimacy of any contact claiming to be from a financial institution by calling their official customer service numbers directly.
  • Update Security Measures Regularly: Regularly update API keys and other security settings on crypto-related accounts.
  • Stay Informed on Scams: Stay updated on the latest scam tactics to better recognize and avoid them.

The recent wave of attacks impersonating Coinbase representatives underscores the ongoing threats faced by cryptocurrency users. With significant amounts of money at stake, it is crucial for users to remain vigilant and adhere to stringent security practices. The financial and emotional toll of such scams can be devastating, highlighting the urgent need for both personal diligence and enhanced security measures within the industry.

Featured image credit: DALL-E by ChatGPT

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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