Coinbase claims it’s not responsible for $96000 missing from user’s wallet

A Coinbase user is suing the cryptocurrency exchange after losing almost $96000 from his wallet. The crypto firm has already denied that it is responsible for the loss incurred, claiming that the negligence on the user’s part provided the opportunity for an attack, Bloomberg reports.

The customer, identified as Jared Ferguson of Staten Island, explained he got a text in May on his mobile phone describing a SIM card change request that he hadn’t made. After restoring service to his iPhone the following day, Ferguson discovered that nearly all of his life savings had disappeared into thin air from his account.

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Hurting deeply, Ferguson pins the blame on Coinbase; he argues that according to state and federal laws, the crypto firm must shoulder responsibility for unauthorized withdrawals.

In response to the allegation, Coinbase Global Inc. disclosed that it would not be held accountable for losses caused by a security breach. Refusing to compensate Ferguson, the company stated in an email that the security of passwords and two-factor authentication codes are solely his responsibility.

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“Please note you are solely responsible for the security of your e-mail, your passwords, your 2FA codes, and your devices,”

Coinbase wrote Ferguson, according to the complaint filed in a San Francisco Federal court on Monday.

Bloomberg reports that Ferguson claims Coinbase’s security procedure fails to flag and hold “obviously fraudulent and unauthorized transactions.” He says his account was emptied within eight hours by a new mobile carrier after he changed his password. He claims the IP address has no prior association with his account.

Coinbase, trying to save the exchange from its recent low trading volume, has suffered yet another setback. With a history of scam cases, the crypto community waits patiently to see the path the company will take.

Coinbase and its history of missing funds

Coinbase has a history of users reporting missing funds. However, the crypto exchange is notorious for refusing to take full responsibility for these cases.

In 2022, The Washington Post reported that the exchange had seen numerous cases of thousands of people losing tens of millions in cryptocurrency to scams over the past year. Nearly 100 people tried to hold Coinbase accountable, saying the company didn’t do enough to protect them.

These victims claimed they notified the company, begging it to fix defects in its Coinbase Wallet software that had allowed the victims unknowingly to grant the scammers access to their accounts.

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Most of the complaints recorded revealed a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from the company.

In 2021, CNBC reported the story of Tanja Vidovic, a Coinbase customer, who received a series of alerts about someone resetting her crypto account access, followed by the quick vanishing of nearly all of her $168,000. After a series of complaints, Coinbase said they could do nothing about it.

Coinbase’s customer service has been primarily via email, and many customers say it is hard to reach representatives and that they have not been made whole for their losses. CNBC also reports that former employees say the company’s customer service practices shifted over time, with representatives struggling to keep up with demand.

Reports claim that since 2016, Coinbase users have filed more than 11,000 complaints against the company with the Federal Trade Commission and Consumer Financial Protection Bureau, most related to customer service.

Scam victims claim that after making endless notifications to the company, asking for a quick fix for their porous wallets, Coinbase has failed to show up bearing solutions to these complaints.

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“They’re trying to be a financial institution without the infrastructure to back it up,” said Eric Rosen, a lawyer at Roche Freedman representing some 96 victims in the arbitration demand filed against Coinbase.

If Coinbase desires to scale its revenue and remain at the forefront of the crypto industry, the company will need to be responsive and responsible for these scam cases, being responsible because they find a way to settle victims and keep them as customers.