- Coinbase Loses Millions of Users
- Featured Social Engineering Scams
- Coinbase Security Criticism
Blockchain researcher ZachXBT revealed that between December 2024 and January 2025, Coinbase users suffered losses exceeding $65 million due to social engineering scams. He notes that this figure may be an underestimate, as it does not include cases reported directly to Coinbase support or law enforcement.
1/ Over the past few months I imagine you have seen many Coinbase users complain on X about their accounts suddenly being restricted.
This is the result of aggressive risk models and Coinbase's failure to stop its users losing $300M+ per year to social engineering scams. pic.twitter.com/PjtX7vmjqc
— ZachXBT (@zachxbt) February 3, 2025
Scammers use personal data obtained from private databases to trick victims. One of the most common strategies involves sending fraudulent emails that mimic official communications from Coinbase, warning of unauthorized login attempts. These emails contain a fake case number and instruct users to transfer their funds to a Coinbase wallet while also instructing them to authorize a specific address.
According to ZachXBT, the criminals clone the Coinbase website in a nearly identical manner, allowing them to manipulate victims with personalized messages sent via spoofed emails. In addition, several Telegram channels are used to promote and sell these fraudulent dashboards, making it easier for new scammers to access the tools they need to commit the scams.
The estimated annual losses from these scams exceed $300 million. ZachXBT criticized Coinbase for failing to adequately address this issue, arguing that other major exchanges do not have similar issues with scam panels created by criminals.
Furthermore, the investigator alleged that Coinbase often fails to report the addresses used by scammers, allowing the thefts to continue for weeks. He also mentioned that a Coinbase employee advised users to avoid using VPNs to avoid being flagged as suspicious, while scammers themselves block VPNs on phishing sites. For ZachXBT, this recommendation is evidence that Coinbase is failing to properly diagnose the root cause of the problem.
Given this scenario, ZachXBT urged Coinbase leadership to strengthen security measures against social engineering attacks. Among the suggestions presented, he proposed making it optional for KYC-verified users to enter phone numbers, creating a beginner account type that restricts withdrawals, and improving the exchange's communication with its community to raise awareness about these scams.