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Coinbase, the leading cryptocurrency exchange in the United States, is facing scrutiny after a wave of social engineering scams between December 2024 and January 2025 resulted in millions of dollars in losses for its users.
According to a report by blockchain investigator ZachXBT, at least $65 million was stolen from Coinbase clients during this two-month period.
1/ Over the past few months I think you’ve seen many Coinbase customers complain on X about their accounts suddenly being restricted.
This is the result of aggressive risk models and Coinbase’s failure to stop its customers losing $300M+ per year to social engineering scams. pic.twitter.com/PjtX7vmjqc— ZachXBT (@zachxbt) February 3, 2025
The report sheds light on a broader issue, with total estimated losses exceeding $150 million over the past year.
The common thread in these scams is the use of phishing emails, spoofed customer support calls, and fraudulent websites that mirror Coinbase’s interface.
Attackers trick victims into transferring funds to scam wallets under the guise of account security verification.
Once the funds are moved, they are quickly laundered through bridges and mixing services, making recovery nearly impossible.
Despite repeated warnings from cybersecurity experts, Coinbase has struggled to implement effective countermeasures, leaving users vulnerable to rising threats.
How the Scams Work and Why Coinbase is Struggling to Respond
In a detailed breakdown, ZachXBT and a fellow researcher analyzed withdrawal data and user experiences, revealing a pattern of sophisticated scams exploiting Coinbase’s security shortcomings.
One notable case involved a victim who lost approximately $850,000, which was traced to a single consolidation address linked to over 25 other victims.
Another high-profile theft saw a Coinbase user lose 110 cbBTC, Coinbase’s wrapped Bitcoin on its Base network, valued at $11.5 million.
ZachXBT’s investigation reveals that scammers employ a combination of advanced techniques and psychological manipulation to gain access to user accounts.
Attackers often initiate contact via phone calls, leveraging data from breached databases to appear authentic.
They pose as Coinbase representatives, warning users that their accounts have been compromised and requiring immediate action.
Victims are then directed to fraudulent websites that closely mimic Coinbase’s interface, where they are prompted to enter their login credentials or approve transactions—unwittingly transferring funds to scam addresses.
5/ They then sent a spoofed email which looked like it was from Coinbase with a fake Case ID further gaining trust.
They instructed the victim to transfer funds to a Coinbase Wallet and whitelist an address while “help” verified their account’s security. pic.twitter.com/pOTQpnMfCz— ZachXBT (@zachxbt) February 3, 2025
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Beyond phishing techniques, scammers manipulate Coinbase’s own security measures.
They deceive victims into whitelisting malicious addresses or transferring assets under the pretense of securing their funds in a “secure” Coinbase Wallet.
After the initial transfer, scammers act quickly, swapping, bridging, and mixing the assets across multiple chains to obscure their trail.
This rapid laundering process ensures the stolen funds become nearly impossible to trace or recover.
Despite the scale of these attacks, Coinbase’s response has been inadequate. Users report difficulties reaching customer support, and some cases have remained unresolved for weeks.
Many victims claim they received generic responses or were ignored entirely. Meanwhile, competing exchanges such as Kraken, Binance, and OKX have not faced comparable large-scale phishing operations.
Adding to the problem, Coinbase’s internal risk models have led to aggressive restrictions on legitimate user accounts while failing to prevent scams.
The exchange has also been criticized for failing to flag theft addresses in compliance tools, allowing scammers to continue operating undetected.
Demands for Urgent Security Reforms
As frustration mounts, experts and users alike are calling for urgent security reforms within Coinbase.
ZachXBT outlined several measures the exchange should take to protect its users.
12/ I strongly urge the Coinbase leadership team to consider:
a) Making phone numbers optional for advanced users with Authenticator app or Security Key added who’re fully KYC verified.
b) Add a beginner / elderly user account type that doesn’t allow withdrawals.
c) Increase…— ZachXBT (@zachxbt) February 3, 2025
One measure is to enhance account security by making phone numbers optional for advanced users who prefer authenticator apps or security keys.
Protections for elderly and novice users should be introduced, with account types that limit high-risk withdrawals for less-experienced traders.
Coinbase was also urged to improve community outreach by increasing security awareness through blog posts, real-time incident response, and proactive scam detection.
Beyond internal security measures, experts emphasize the importance of legal action against cybercriminals.
Efforts should be made to hold US-based threat actors accountable while targeting companies like TLOxp and TransUnion, which provide data exploited in these scams.
While Coinbase has taken steps to improve its platform—such as offering stablecoin on/off ramps and engaging in legal battles against the SEC—these initiatives do little to address the rising tide of social engineering attacks.
