A Coinbase user reportedly lost about $34.9 million worth of BTC to scammers

A Coinbase user reportedly lost about $34.9 million worth of BTC to scammers, according to crypto investigator ZachXBT.

A Coinbase user reportedly lost about $34.9 million worth of BTC to scammers, crypto investigator ZachXBT has claimed.

Taking to his Telegram channel ‘Investigations by ZachXBT’ on March 28, ZachXBT pointed out that a staggering sum of 400.099 BTC, valued at approximately $34.9 million, was transferred to an address ‘bc1qvlustvxhqzee9tgqers4tfungrg6c0fs4u76jf.’

The funds were later bridged from Bitcoin to Ethereum via Thorchain or Coinflip and subsequently converted to the DAI stablecoin, finally exiting in a mixer. However, Coinbase failed to flag any of the theft addresses from these victims in its compliance tools.

The crypto exchange's customers are losing about $300 million to scammers annually, and about $65 million was stolen between December 2024 and January 2025, which is becoming an increasingly troubling trend.

The scammers use sophisticated social engineering attacks and mostly target the elderly. Scammers use stolen personal data to trick users by sending fraudulent emails that impersonate official Coinbase communications, including fake case IDs, to lure victims into transferring funds to wallets controlled by the scammers.

“Scammers clone the Coinbase site nearly 1:1 and allow the scammers to send different prompts to the target via spoofed emails using panels,” ZachXBT noted.

Alongside these scams, Coinbase has faced multiple security breaches, which it never publicly acknowledged. These incidents include compromises involving outdated API keys for tax software sending verification codes to any email address regardless of its association with an account.

In 2023, Coinbase Commerce suffered a $15.9 million theft, while a threat actor laundered about $38 million from the BTCTurk hack through Coinbase. According to ZachXBT, these highlight systemic security lapses and inadequate customer support, which he put at the door of Coinbase’s leadership.

Coinbase lapses in regulatory compliance and ensuring security

The crypto exchange has also been accused of failing to comply with regulatory frameworks. Its failure to flag addresses related to thefts in monitoring tools creates blind spots in fraud detection.

In contrast, competitors like OKX and Binance are more proactive in managing similar threats. For example, OKX swiftly responds to reports of stolen funds, notifying relevant parties and cooperating with authorities to recover the funds. Similarly, Binance is actively involved in tracking and reporting fraudulent activity to keep its platform and users safe.

Coinbase, however, has repeatedly failed to take decisive action against threat actors, despite being notified multiple times.

In July 2024, CB Payments Limited, or CBPL, the UK branch of Coinbase, was fined £3.5 million by the UK Financial Conduct Authority for AML violations. CBPL entered a voluntary requirement with the FCA, which prevents the company from servicing high-risk clients. However, it breached this requirement and onboarded and served about 13,500 high-risk clients. The FCA says these breaches were a result of CBPL’s lack of due skill, care, and diligence in the design, testing, implementation, and monitoring of security controls.

Crypto scams are increasing in frequency and severity. In February 2025, Bybit experienced a massive security breach, which resulted in the loss of about $1.5 billion worth of Ethereum when hackers gained control of an Ethereum wallet during a routine funds transfer between a cold and hot wallet. These incidents show the persistent threat crypto exchanges face.

In response, regulatory bodies are intensifying efforts to make the crypto space safe. For example, the U.S. Securities and Exchange Commission (SEC) is revising its approach to crypto regulations and cybersecurity. SEC Commissioner Hester Peirce emphasized the need for clear regulatory frameworks that define the SEC’s jurisdiction.

Criticizing previous enforcement-based approaches, Peirce advocated for principles-based rule-making to foster innovation while ensuring security.