Coinbase user sues crypto exchange for missing $96,000
Yahoo Finance’s Alexis Keenan joins the Live show to discuss news that a Coinbase user is suing the crypto exchange after an alleged loss.
Video transcription
JARED BLIKRE: Now imagine losing your savings due to an account hack, and that’s exactly what happened to Jared Ferguson. No connection. He says $96,000 was stolen from his Coinbase account and he is now suing the crypto exchange to take responsibility for the unauthorized withdrawals, but the company has refused to refund him.
Yahoo Finance’s Alexis Keenan has the details. And, Alexis, I have to say, I’ve seen some of these happen with broker-dealers, and it’s kind of the bottom line for these brokers is that 2FA, any kind of authentication is at the end.
ALEXIS KEENAN: That is correct.
JARED BLIKRE: And this might agree with that.
ALEXIS KEENAN: And that’s Coinbase’s argument here, we guess. We’ve seen it before. This isn’t the first time we’ve seen one of these lawsuits.
But some of the claims made by this plaintiff, Jared Ferguson, may be a little novel. He makes both state and federal allegations, a bunch of them, four of them to be exact. And he says Coinbase is intentionally blinding itself to a confluence of factors that should tip it off that these transactions are likely fraudulent.
So let’s go through them. That’s what the complaint says. They said take a look. This is out of character for Ferguson’s account usage. The account was tapped. It happened within eight hours. Occurred on a new device that had not previously been associated with his account. Happened with a new IP address. Also occurred immediately after new password was reset and also without previously activated facial recognition that he had set up.
We have now contacted Coinbase to request a response. We haven’t heard from them yet, even though I’ve been covering these cases for years, talking to plaintiffs/victims of these types of hacks for years.
And when I last spoke with Coinbase’s chief information officer, he had said, look, it’s getting harder and harder for people to secure their personal information with so much online. So there seems to be some recognition, at least a couple of years back by the company, that they know it’s hard for people to keep private information private.
But how this particular hack happened and how that money was drained is the way it’s drained for many, many consumers, and that’s at a SIM swap. And that’s when the hacker goes – is an impostor who pretends to be the account owner of a mobile device. And then they can insert a new SIM card, have it replaced by the mobile operator. And this has also happened across mobile operators. This one happens to be a T-Mobile customer here, this plaintiff, but it’s happened across all the carriers in the US at least.
So see, this is trouble for both the mobile operators as well as crypto exchanges. We’ll see if this lawsuit has any legs. It raises some new arguments.
JULIE HYMAN: Yes, and it also seems like everyone needs to improve their security…
JARED BLIKRE: Yes.
JULIE HYMAN: –as both on an individual and these companies.
JARED BLIKRE: AI should disrupt this in the near future. All these flags – all these flags, I mean, you’d think. And, you know, anyone who loses that amount unnecessarily because of a hack, my heart goes out to them because trading is hard enough.
JULIE HYMAN: Yeah sure.
ALEXIS KEENAN: Absolutely.
JARED BLIKRE: Trading is hard enough.
ALEXIS KEENAN: I have spoken to many consumers who have lost millions, and not to mention that makes this $96,000 less. This plaintiff, he says it’s close to his life savings.
JULIE HYMAN: Alexis, thank you. Appreciate it.
