96 File Legal Action Demanding Coinbase Reimburse $21M Lost to Crypto Scammers (yahoo.com) 30
"Over the past year, thousands of people have lost tens, if not hundreds, of millions in cryptocurrency when gangs of sophisticated scammers whisked their money out of their accounts," reports the Washington Post, noting the accounts "managed by an app from the publicly traded cryptocurrency giant Coinbase.
"Now those victims are fighting back. Nearly 100 people are trying to hold Coinbase accountable, saying the company didn't do enough to protect them." Scam victims says they notified the company, begging it to fix defects in its Coinbase Wallet software that had allowed the victims unknowingly to grant the scammers access to their accounts. The requests were to no avail, scam victims say.
"They're trying to be a financial institution without the infrastructure to back it up," said Eric Rosen, a lawyer at Roche Freedman representing some 96 victims in the arbitration demand, which is akin to a lawsuit, filed against Coinbase. "There were no procedures in place to stop these frauds," Rosen said. "Of course, scammers quickly picked up on this, and directed victims to download the Coinbase Wallet."
Many of the victims lost their life savings. The demand says that the rules requiring banks to reimburse debit-card users for unauthorized transfers also should apply to Coinbase's customers....
If the arbitration demand results in an order that Coinbase reimburse its customers, it provides the possibility of a way forward for the victims of a massive ongoing scam that The Washington Post reported in April had already caused thousands of victims more than $60 million of losses. The individuals participating in the Coinbase arbitration demand, some of whom were scammed as late as this August, say they lost more than $21 million total.
Many were forced by Coinbase Wallet's terms of service to turn to arbitration instead of challenging them through the U.S. courts. The decision of the arbitrator won't set a formal legal precedent, but will help answer one of the top questions of the b urgeoning crypto era: Do the existing rules of the financial system apply to cryptocurrency companies?
One more interesting detail from the Post's article. "Reports from ProPublica and Vice say that at least some of the front-line scammers are themselves victims of human trafficking in Southeast Asia, forced to work under threats of violence."
"Now those victims are fighting back. Nearly 100 people are trying to hold Coinbase accountable, saying the company didn't do enough to protect them." Scam victims says they notified the company, begging it to fix defects in its Coinbase Wallet software that had allowed the victims unknowingly to grant the scammers access to their accounts. The requests were to no avail, scam victims say.
"They're trying to be a financial institution without the infrastructure to back it up," said Eric Rosen, a lawyer at Roche Freedman representing some 96 victims in the arbitration demand, which is akin to a lawsuit, filed against Coinbase. "There were no procedures in place to stop these frauds," Rosen said. "Of course, scammers quickly picked up on this, and directed victims to download the Coinbase Wallet."
Many of the victims lost their life savings. The demand says that the rules requiring banks to reimburse debit-card users for unauthorized transfers also should apply to Coinbase's customers....
If the arbitration demand results in an order that Coinbase reimburse its customers, it provides the possibility of a way forward for the victims of a massive ongoing scam that The Washington Post reported in April had already caused thousands of victims more than $60 million of losses. The individuals participating in the Coinbase arbitration demand, some of whom were scammed as late as this August, say they lost more than $21 million total.
Many were forced by Coinbase Wallet's terms of service to turn to arbitration instead of challenging them through the U.S. courts. The decision of the arbitrator won't set a formal legal precedent, but will help answer one of the top questions of the b urgeoning crypto era: Do the existing rules of the financial system apply to cryptocurrency companies?
One more interesting detail from the Post's article. "Reports from ProPublica and Vice say that at least some of the front-line scammers are themselves victims of human trafficking in Southeast Asia, forced to work under threats of violence."
Financial institution (Score:5, Insightful)
They're trying to be a financial institution without the infrastructure to back it up
Were they? You wanted to be free of government interference over your hard earned money. You wanted a world where it was free to do anything you want - which means some of you will be scammers targeting the rest of you - and you didn't want to be protected because that's a nanny state, and you're too intelligent and sophisticated to require a safety net.
You got what you asked for - no regulatory oversight. "They" were merely doing what you asked - do absolutely nothing that a government regulated financial institution is required to do.
Do the existing rules of the financial system apply to cryptocurrency companies?
Morally speaking, only to the extent that it prevents or minimizes its dangers from spreading into the regular financial system and economy.
Re:Financial institution (Score:4, Interesting)
I'm always amazed by people that want unregulated/deregulated anything, and then seem to be shocked when the shit hits the fan.
It's some next level delusion going on right there.
Re: (Score:2)
Why? Rules are a pain in the ass. When *you* have to follow them, of course. They're super important when it's someone else ignoring them.
Re: (Score:2)
Were they? You wanted to be free of government interference over your hard earned money.
No many people didn't want that. Some people were stupid enough to think of Crypto as an investment, not as an f-you to the government. I mean both scenarios are equally stupid, but many people do assume that the government does cover them against basic fraud.
Even to the point where the FDIC has issued notices to cryptoexchanges telling them to stop using their name.
no victims here (Score:4, Insightful)
Re: (Score:2)
Stealing money from an idiot is not a victimless crime. Just because someone is an idiot, doesn't make it OK to take money from them through deception and false pretenses.
Re: (Score:2)
Re: (Score:2)
Have you *never* done something stupid? Of course, you wouldn't fall for crypto scams because you are educated in how they work. Not everyone is as lucky or as smart as you. Some people have been told by their friends that crypto is a good bet, that it's the new thing. Have you ever done something because all your friends were doing it?
We can stare down our self-important noses at the "suckers" who fall for these things. Or we can recognize it for the crime that it is and go after the criminals.
Good luck even if they used a bank. (Score:3)
Re: Good luck even if they used a bank. (Score:2)
Re: (Score:1)
The issue is victims didn't know that they were doing such action due to the poor UI of Coinbase Wallet. They believe that it is an actual security hole of Coinbase Wallet. Please read the following blog posts and let me know your opinion on whether there was any security hole and how Coinbase react to their reports:
Re: (Score:2)
>Please read the following blog posts and let me know your opinion on whether there was any security hole
There was no security hole. The users downloaded and installed and agreed to the terms of the app that gave the scammers access to their wallet. Because the people thought they were going to get "unbelievable" payouts. It was a scam, pure and simple. One of the posts goes into the code and actually shows the line that gives the address access to your wallet.
Install some janky app for unbelievable r
Re: Good luck even if they used a bank. (Score:1)
I am not sure if you understood what you read, but the only app they installed was Coinbase Wallet. They did not install any other app. The only action they did was exploring dapps as encouraged by Coinbase saying that their wallet is for exploring a whole world of dapps. They were always keeping their seed phrase safe. Coinbase was saying that they can only lose their funds if they leaked that seed phrase which was never the case.
Re: (Score:2)
>Coinbase was saying that they can only lose their funds if they leaked that seed phrase which was never the case.
Coinbase was saying that they can only lose their funds *if they authorized the transaction* or if they leaked the seed phrase. They authorized the transaction, based on the code of the dapp of the scammers, which the user had to somehow interact with and authorize to their account.
Re: (Score:1)
Most victims don't know code and even if you know code you won't go and inspect it in your phone. That's why users rely on Coinbase Wallet, the app that they are using to inform them of what the app is doing.
In this case, Coinbase Wallet was not informing users that it was executing a transaction that grants unlimited access to victims' USDT where scammers can take their funds at anytime. Relying on Coinbase's UI, victims never authorized any outgoing transaction, they were only confirming a payment to purc
What's the problem exactly? (Score:4, Insightful)
You wanted no oversight and nobody to regulate it, you got it. Now you're complaining you got what you wanted?
Re: (Score:2)
Just because criminals want no oversight, doesn't make their activities less criminal. In past times, criminals favored cash because it's harder to trace. Stealing cash was still criminal.
Re: (Score:3)
True, and if you look really close you will find that cash actually is pretty well regulated. Try printing your own and you find out the hard way.
Pure stupidity (Score:2)
"Scam victims says they notified the company, begging it to fix defects in its Coinbase Wallet software that had allowed the victims unknowingly to grant the scammers access to their accounts. The requests were to no avail, scam victims say."
- "Scam victims" notice weaknesses in the safe where their life savings are kept and notify the operator of the safe
- the operator does nothing
- "Scam victims" continue keeping their money in that safe hoping for the best
- "Scam victims" predictably lose their money
Well
Use a currency with no reversable transactions... (Score:5, Insightful)
Re:Use a currency with no reversable transactions. (Score:5, Interesting)
Yeah, I noticed what seems to be happening here:
1) You open a ticket asking Coinbase for support. They'll ignore you, because Coinbase support sucks.
2) In desperation, you make a comment on social media like Twitter or Reddit asking for help.
3) Within seconds, a Coinbase scam bot will respond to your request for help with a Google form requesting your private seed phrase. You're never supposed to give this out, but gullible people will.
(Seriously, try this yourself. Post a Tweet with the word "Coinbase" in it, and watch how fast the scam bots respond. Elon Musk is going to have fun cleaning up this mess.)
4) The scammers will clean out your account within minutes.
5) You desperately ask Coinbase again for help, and you'll get back nothing. Again, see explanation from step 1.
6) Two weeks later, you'll get some lame canned response from Coinbase that doesn't actually answer your problem. AGAIN, see explanation from step 1.
Re: (Score:2)
You will likely be a victim too if you believe the scammer needs to get your seed phrase to take your money. The seed phrase was never given out. In fact, the victim in this post believed in that and that's how he got scammed:
If you want to learn more how that's possible, read this post:
You can read the post below to see how tha
Lotsa luck (Score:3)
What did that lawyer say? (Score:1)
"Oh no, my coins!"
I don't really agree with them. (Score:2)
If Peanuts' Lucy scrabbles together enough money to put a brick facade on the outside of her "Psychiatric Help 5 Cents" booth, I'm still not going to feel sorry for people who use her services and find them lackluster.