Scammers Pose as Coinbase Employees, Steal $1.7M in Crypto Fraud

A recent scam has seen bad actors impersonate Coinbase employees to defraud users out of millions of dollars’ worth of cryptocurrency assets. Tegan Kline, the co-founder of Edge & Node, has alerted the community about this new attack, where his friend lost $1.7 million from their self-custody wallet. The victim was tricked into sharing their private key.

The scammers initiated contact via a phone call, posing as employees of the crypto exchange Coinbase. Following the call, they sent an email that appeared to be from Coinbase’s security team. In the email, the scammers identified themselves as “David Brown” and claimed the recipient was speaking to an official Coinbase representative.

To add legitimacy, the scammers referenced the victim’s past transactions on Coinbase. They then falsely claimed that the victim’s wallet was “connecting directly with the blockchain,” resulting in unauthorized transactions. This was followed by another email showing an outgoing transaction.

To resolve the issue, the victim was redirected to a fraudulent website controlled by the scammers. Despite knowing the website was unsafe, the victim entered a portion of their key phrase but did not submit it fully. Nevertheless, $1.7 million was siphoned from the victim’s wallet.

Hiro Systems CEO Alex Miller explained that these malicious websites capture data as users enter it. He noted that even a part of a seed phrase is enough for scammers to “brute force the rest.” Miller himself was targeted in a similar scam, where the scammers claimed someone was trying to access his account.

“This feels like a moderately-targeted attack. They created a look-alike email address and spoofed a phone number similar to mine but so far haven’t appeared to try and phish me or crack any of my underlying accounts,” Miller added.

Another user, “TraderPaul04,” also reported thwarting a similar attack. He received an automated call claiming his Coinbase account was being accessed from a different location. Following this, he received a call from an individual claiming to be a Coinbase employee and a fake password reset link, which he identified as a phishing attempt. The user confirmed there were no login attempts on his account.

The Coinbase brand name has been used by scammers on numerous occasions, not just through employee impersonation. In May, the United States Department of Justice charged an individual for stealing $37 million in crypto via a fake Coinbase Pro website.

Beyond Coinbase, scammers have impersonated other crypto exchanges, government agencies, and even celebrities. In some instances, victims have been duped under the guise of job interviews.

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