Coinbase Unauthorized Bank Access
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The plaintiff reports that there was an unauthorized withdrawal from his bank account through the Coinbase platform. It's unclear if the ethereum was withdrawn from his account. The issue was not resolved through Coinbase, and as of November 2021 is being brought before the courts.
This exchange or platform is based in United States, or the incident targeted people primarily in United States.[1][2][3][4][5]
About Coinbase
"Coinbase is a secure platform that makes it easy to buy, sell, and store cryptocurrency like Bitcoin, Ethereum, and more." "As the leading mainstream cryptocurrency exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. Coinbase offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors, and its own U.S. dollar stable-coin."
"Coinbase was founded in 2012 and is a fully regulated and licensed cryptocurrency exchange supporting all U.S. states except Hawaii. Coinbase initially only allowed for Bitcoin trading but quickly began adding cryptocurrencies that fit its decentralized criteria."
"Its list expanded to include Ethereum, Litecoin, Bitcoin Cash, XRP, and many others with the promise of more as long as its requirements are met."
"On November 8, 2021, Adam Alfia (“Plaintiff”), individually and on behalf of others similarly situated, represented by Evan Matthew Selik of McCathern LLP, filed a class action lawsuit against Coinbase Global, Inc. and DOES 1 through 50 (collectively, “Defendants”), seeking damages along with prejudgment and post judgement interests among other relief for the alleged breach of contract that caused a lot of worry and stress to Plaintiff. This case was filed in the United States District Court in the Northern District of California with Judge Alex G. Tse presiding.
In the complaint, Plaintiff alleged that, “Coinbase stated in 2012 and is an online platform that allows consumers all over the world the ability to able to securely send and receive Bitcoin. Currently, Coinbase has expanded its platform for accessing the broader cryptoeconomy, including Ethereum. On April 15, 2021, Coinbase went public” and “Mr. Alfia used Coinbase as a way to buy, sell and manage his cryptocurrency. He commonly traded Bitcoin, Ethereum and Dogecoin through Coinbase.”
Plaintiff further alleged that, “On July 19, 2021, Mr. Alfia logged into his Coinbase account to find that a purchase of $50,000 of Ethereum had occurred. Mr. Alfia did not make this purchase or consent to have any other person or entity make this purchase” and “Thereafter, on the same day, Mr. Alfia logged into his Bank of America banking account to investigate if the $50,000 used to purchase Ethereum had actually been deducted from his Bank of America banking account. He saw that it had. This caused Mr. Alfia great stress and worry.”
Plaintiff also alleged that, “At all relevant times, Coinbase had a duty to Plaintiff and the putative class wherein it would properly secure their private information and cryptocurrency from unauthorized transactions and dissemination” and “Coinbase failed to properly secure Plaintiff and the putative class’s private information and cryptocurrency from unauthorized transactions and dissemination” and “As a result of Defendant’s conduct as alleged herein, Defendant breached its duty to Plaintiff and the putative class, thus causing significant damage, worry and stress.”
"There are four claims of relief laid down by Plaintiff. The first claim is for the alleged breach of contract. The second claim is for alleged negligence. The third claim is for alleged fraud. The fourth claim is for alleged negligent misrepresentation."
"In the prayer for relief, Plaintiff requested the court to certify this action as a class action. Further, Plaintiff requested the court for a judgment against Defendant along with punitive damages for committing fraud along with prejudgment and post-judgment interest, attorneys’ fees, and cost of suit along with any such other relief the court deems just."
This exchange or platform is based in United States, or the incident targeted people primarily in United States.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| July 19th, 2021 | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
Technical Details
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
Total Amount Lost
The total amount lost has been estimated at $50,000 USD.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
There do not appear to have been any funds recovered in this case.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
General Prevention Policies
The fundamental issue is most likely due to unauthorized access to the account. Coinbase failed to properly authenticate the plaintiff. Without specific details on this case, it's hard to know what happened. In general, authentication should be multi-factor and require further factors for specific account actions such as withdrawals or trading.
Individual Prevention Policies
No specific policies for individual prevention have yet been identified in this case.
For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.
Platform Prevention Policies
Policies for platforms to take to prevent this situation have not yet been selected in this case.
For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.
Regulatory Prevention Policies
No specific regulatory policies have yet been identified in this case.
For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.
References
- ↑ Alfia v Coinbase Global, Inc | 4:21-CV-08689 | Court Records - UniCourt (Jan 14, 2022)
- ↑ https://www.coinbase.com/ (Dec 4, 2021)
- ↑ https://www.coinbase.com/about (Dec 4, 2021)
- ↑ Morioh (Dec 4, 2021)
- ↑ https://blog.coinbase.com/continuing-our-commitment-to-customers-introducing-phone-support-for-atos-c9ca788bf85 (Apr 23, 2022)