Deceptive Scam Hits Coinbase Users, Leading to $1.7 Million Loss

Last week, leading cryptocurrency exchange Coinbase faced a surge in impersonation scams targeting at least four users.

Crypto thieves employed social engineering and impersonation tactics to deceive victims into revealing sensitive financial information. One notable victim lost over $1 million in cryptocurrency to the scammers.

High-Profile Victim Loses $1.7 Million

Tegan Kline, co-founder of Edge & Node, revealed in a July 8 X post that a close acquaintance fell victim to an impersonation scam and lost $1.7 million from their self-custody wallet.

The scam involved the fraudster sending emails that appeared to be from Coinbase, attempting to verify their identity as a representative of the exchange.

The scammer fabricated a story about the victim’s wallet being directly connected to the blockchain, which was supposedly causing unauthorized transactions.

To lend credibility to their claims, the scammer sent a fake email displaying an outgoing transaction. They then directed the victim to a website to enter their seed phrase.

CT, a member of the community urgently needs your help.

$1.7 Million stolen – A good friend's self custody wallet was drained by a scammer yesterday, July 6th.

TLDR of how it went down below (3 pages)⤵️

You can find the Ethereum transactions with links in the comment below.… pic.twitter.com/OTx3wslz6R

— Tegan.eth 🌅,🦩 (@theklineventure) July 7, 2024

The victim entered part of their seed phrase, which allowed the scammers to gain partial access to the wallet and inflict significant financial damage.

Alex Miller, CEO of Hiro Systems, explained that such fraudulent websites are designed to capture data as it is entered, enabling criminals to potentially brute force the remaining parts of the seed phrase.

Miller himself reported being targeted by a similar scam, suggesting that the attackers may have been using information leaked from CoinTracker’s email service provider database in 2022.

Other users also reported experiencing similar scams. An X user known as “TraderPaul04” described a “pretty sophisticated” attempt in which a scammer posing as a Coinbase representative claimed there was a suspicious login attempt on their account.

The scammer then tried to manipulate the user into revealing their account password through a fake password reset link. Another user, “beanx,” reported receiving a similar call from a fake Coinbase representative alleging an unauthorized login attempt.

This recent wave of scams is not the first time malicious entities have targeted Coinbase users. In October 2023, scammers used the Coinbase domain name for phishing attacks. Users reported receiving texts and emails from scammers containing links under the domain Coinbase.com.

Rising Incidence of Crypto Phishing Theft

The incidence of crypto phishing theft continues to rise. In the first half of 2024, approximately $1.19 billion was lost to crypto security incidents, with over $900 million stolen through phishing and seed phrase compromise attacks.

According to recent data from blockchain research firm Scam Sniffer, phishing scammers stole about $314 million worth of cryptocurrency in just six months, marking a 6.44% increase compared to the same period in 2023.

The data for 2024 is significantly higher than the figures reported for the entirety of 2023. Last year, crypto phishing scams drained nearly $300,000 from 320,000 users. Experts advise cryptocurrency users to remain vigilant and adhere to best security practices.

This includes never sharing seed phrases or private keys with anyone, even if they claim to be from a reputable exchange.

The recent surge in impersonation scams targeting Coinbase users highlights the growing threat of crypto phishing theft. As scammers continue to refine their tactics, cryptocurrency users must stay informed and exercise caution to protect their assets.

By following recommended security measures, users can reduce their risk of falling victim to these sophisticated scams.