Coinbase Under Fire for Security Lapses Amid $300M in User Losses

Last Updated on February 4, 2025

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Silhouette of Hand Holding iPhone with Coinbase Logo in Front of Computer Screen Displaying Logo. Source: Tigarto - stock.adobe.com

Key Takeaways:

  • Security Concerns: Investigators accuse Coinbase of failing to address security vulnerabilities, leading to over $300 million in annual user losses.
  • Unresolved Issues: Criticisms include old API exploits, verification code vulnerabilities, and stolen funds laundering through Coinbase.
  • Scammer Insights: A phishing scammer claimed to earn at least five figures weekly, targeting high-value individuals while avoiding lower-income users.

Cryptocurrency investigators ZachXBT and tanuki42 have accused Coinbase of security failures that have led to user losses exceeding $300 million annually.

Their report, released on Feb. 3, revealed that over $65 million was stolen from users in December 2024 and January 2025 alone.

However, they believe the actual figure is much higher due to limited access to police reports and Coinbase’s internal support records.

The investigation suggests that many scams are orchestrated by actors based in India, primarily targeting U.S. users. Coinbase’s security measures, including discouraging VPN use, have come under scrutiny.

Investigators argue that scammers exploit these weaknesses by blocking VPN access to phishing sites, exposing Coinbase’s failure to address security threats effectively.

Key security issues include vulnerabilities in old API keys, verification code exploits, and the laundering of stolen funds through the platform.

Critics also highlight Coinbase’s inadequate fraud prevention, lack of support for non-U.S. users, and ineffective customer service.

Scammers reportedly earn tens of thousands per week from phishing schemes, specifically targeting high-net-worth individuals.

With scams continuing to rise, investigators and users are calling for Coinbase to improve its security measures and protect its customers from further financial losses.

About The Author

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Co-Founder / Managing Editor

Adam Morris, the co-founder of Crypto Head and a respected crypto expert, offers insightful commentary and analysis on cryptocurrency, NFTs, and the evolving digital landscape.

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