Crypto scam victims blame Coinbase for losses

Con artists have been using social apps like WhatsApp, Facebook, and Twitter to trick users into downloading malicious Coinbase Wallet software. The scammer would then send links of bogus websites where the user can purchase a voucher. 

This voucher appears like a secure transaction protected and facilitated by Coinbase's trusted platform but it was actually a malicious smart contract. When the victims discovered this, they were horrified to know that the link gave the scammers complete access to the entire funds.

Many cryptocurrency users were horrified by the news. Nearly one hundred people from various parts of the world are using the publicly traded Coinbase for allegedly not protecting its consumers. 

Users said Coinbase did not care that scammers were stealing hundreds of thousands of dollars worth of coins from user accounts. The users of Coinbase Wallet who filed lawsuits have lost $21 million.

Users were alerting the company about this flaw for a long time. Coinbase made no corrective actions to repair the security weakness or even advise clients about this major concern. 

‘They weren’t even trying’, attorney Eric Rosen, a law firm spokesperson said. ‘Of course, due to their negligence, scammers were able to pick up on it and were able to scam players through the Coinbase Wallet’, he added.

Despite the valid liquidity mining pools promising high returns to users who buy vouchers for small sums, clicking on these harmless-looking vouchers would record a single line of computer code. This grants the scammers the access to steal crypto deposited into an account, weeks, or months later. 

In other crypto frauds, customers are tricked into allowing fraudulent transactions, but that is not the case here. Coinbase users were assured that the only way their accounts could be compromised was through the disclosure of a secret passcode, but the claimants argue that this assurance was false.

Coinbase’s response

When first sued, Coinbase failed to alert its customers when a website was demanding permission to withdraw a big amount of cash from an account. However, after receiving additional legal threats, it amended its policy. Similar wallets like MetaMask and Trust Wallet, have long displayed similar warnings.

‘This is valid proof that Coinbase previously wasn't doing enough to protect its customers’, attorney Jordana Haviv said. Haviv explained the process of appointing an arbitrator. This provided Coinbase with an opportunity to respond to allegations. 

Users who filed claims against Coinbase expect arbitration to result in the long-awaited recovery of cash lost, which in some cases may have amounted to their whole life savings. They also request Coinbase to create a comprehensive list of compromised accounts.

With recent reports of fraudulent activities hitting the cryptocurrency industry, many fans of Bitcoin casino games on top sites like Gamdom, are being extra careful with the apps and sites they use.