Hacked Coinbase User Sues Crypto Exchange for $96,000 in Lost Life Savings

• A Coinbase user is suing the exchange to get back 90% of his savings that he says was stolen from him, the lawsuit alleges.
• The user said that Coinbase will not refund him and it sees the breach as his problem.
• But the exchange ignored several red flags for fraud, he claims in his claim for triple compensation.

A Coinbase customer said he lost $96,000 in a phone hack — and now he’s suing America’s largest cryptocurrency exchange after being told the breach was his problem.

In his lawsuit filed Monday, New York resident Jared Ferguson said 90% of his savings were wiped out on the platform in a security breach via his phone.

The hackers drained the crypto from Coinbase’s platform within eight hours of tricking his mobile provider into handing over control of his phone number, according to the filing.

But the exchange has said it will not reimburse Ferguson and said in an email that customers are responsible for any activity that occurs when devices or passwords are compromised, according to the lawsuit.

“Coinbase’s email disclaimed any responsibility for the hacking of customers’ accounts,” the filing said.

“Please note that you are solely responsible for the security of your email, your passwords, your 2FA codes and your devices,” the exchange said, according to the filing.

Ferguson said his operator told him in May that it had received a request to change his SIM card, which he had not done. He discovered the Coinbase theft the next day when he restored service to his iPhone.

Fraudsters who use SIM swapping scams take advantage of 2-factor authentication (2FA), where banks and other service providers send a text message to the customer’s phone to verify activity on an account. They get an operator to activate a SIM card on a new device for the customer’s number, which allows them to go through all the checks successfully.

In his complaint, Ferguson said he immediately contacted the exchange to report the hacking, but alleges that the procedures are falling down by failing to be aware of clearly fraudulent and unauthorized transactions.

The exchange ignored several red flags for fraud during the theft, he said, such as the use of a new device and password reset, and that it did not use the facial recognition he had put in place.

“Coinbase’s willful blindness to the many fraudulent brands present here constituted bad faith acceptance of the unauthorized payment orders,” the lawsuit states.

It’s not the first time Coinbase has seen complaints from customers who lost money in their accounts in a SIM swap scam. An Indiana man lost $7,200 from his account in 2021 but was unable to recover the money, CBS reported, noting that it had been reporting on similar Coinbase hacks for months.

Coinbase did not respond to Insider’s request for comment.

Ferguson is seeking a full refund plus interest, statutory and punitive damages, including treble damages.