Coinbase users scammed out of $21M in crypto sue company for negligence

Last fall, scammers infiltrated social platforms like dating apps, WhatsApp, Facebook, and Twitter, attempting to convince people to download Coinbase Wallet. Once the targeted users downloaded the wallet, the scammer would then send links to fraudulent websites, prompting users to purchase a “voucher” that seemed like a safe transaction protected and facilitated by Coinbase’s trusted platform, but was “actually a malicious smart contract.” Horrified users eventually discovered the smart contract gave “the scammers complete access to the entire funds in the victim’s wallets” without requiring authorizations to withdraw funds.

Today, nearly 100 people from all over the globe are seeking to make the publicly traded Coinbase pay for allegedly doing nothing to protect users. Users alleged that Coinbase was unmoved by reports that scammers were draining accounts of tens or hundreds of thousands of dollars’ worth of cryptocurrency. In total, Coinbase Wallet users that are suing collectively lost $21 million.

For months, users allegedly warned the company of this seeming security flaw. Instead of acting to protect users, though, Coinbase “took no remedial steps to fix the security flaw or even warn customers about this major problem, despite warning customers about other security risks,” according to a recently filed arbitration demand. This allegedly allowed “hundreds” of additional users to become targets of “an easily preventable” liquidity mining pool scam.