Coinbase user sues the crypto exchange over missing $96,000

Yahoo Finance’s Alexis Keenan joins the Live show to discuss news that a Coinbase user is suing the crypto exchange following an alleged loss.

Video Transcript

JARED BLIKRE: Now imagine losing your life savings due to an account hack, and that’s exactly what happened to Jared Ferguson. No relation. He says $96,000 was stolen from his Coinbase account, and he’s now suing the crypto exchange to take responsibility for the unauthorized withdrawals, but the company has refused to reimburse him.

Yahoo Finance’s Alexis Keenan has the details. And, Alexis, I’ve got to say, I’ve seen a few of these happen with broker-dealers, and that’s kind of the line for these brokers is that 2FA, any kind of authentication is on your end.

ALEXIS KEENAN: That’s right.

JARED BLIKRE: And this is maybe consistent with that.

ALEXIS KEENAN: And that’s Coinbase’s argument here, we suppose. We’ve seen it before. This is not the first time we’ve seen one of these lawsuits.

But some of the claims that this plaintiff is making, Jared Ferguson, are perhaps a bit novel. He’s making both state and federal claims, a bunch of them, four of them to be exact. And he says that Coinbase is willfully making itself blind to a confluence of factors that should tip it off to knowing that these transactions are likely fraudulent.

So let’s go through them. This is the way that the complaint states it. They said take a look. This is out of character for Ferguson’s account usage. The account was drained. It happened within eight hours’ time. Occurred on a new device that had not previously been associated with his account. Happened with a new IP address. Also occurred immediately after a new password had been reset and also without previously activated facial recognition that he had set up.

Now, we’ve reached out to Coinbase to ask for a response. We’ve not heard from them yet, though I have been covering these cases for years, talking to plaintiffs/victims of these types of hacks for years.

And when I last spoke with Coinbase’s chief information officer, he had said, look, it is getting more and more difficult for people to secure their personal information with so much online. So it seems that there’s some recognition, at least going back a couple years by the company, that they do know that it’s tough for people to keep their private information private.

But how this particular hack happened and how this money was drained is the way that it’s drained for many, many consumers, and that is by a SIM swap. And that is when the hacker goes– is an imposter posing as the account owner of a mobile device. And so they are able to put in a new SIM card, get it swapped out by the mobile carrier. And this has happened across mobile carriers too. This one happens to be a T-Mobile customer here, this plaintiff, but it has happened across all of the carriers in the US at least.

So look, this is trouble for both the mobile carriers as well as crypto exchanges. We’ll see if this lawsuit has some legs. It does raise some novel arguments.

JULIE HYMAN: Yeah, and it also seems like, bottom line, everybody needs to improve their security–


JULIE HYMAN: –like both on an individual and these companies.

JARED BLIKRE: AI should be disrupting this in the very near future. All these flags– all these flags, I mean, you would think. And, you know, anybody who loses that amount of money unnecessarily due to a hack, my heart goes out to them because trading is hard enough.

JULIE HYMAN: Yeah, for sure.

ALEXIS KEENAN: Absolutely.

JARED BLIKRE: Trading is hard enough.

ALEXIS KEENAN: I have talked to many consumers who have lost millions, and not to say that makes this $96,000 any smaller. This plaintiff, he says it’s near his life savings.

JULIE HYMAN: Alexis, thank you. Appreciate it.