Bitcoin Scam: How Did a Coinbase User Lose $ 11.6 Million?


A federal judge this month approved a warrant to recover more than $ 600,000 in bitcoin after investigators said a Coinbase user lost $ 11.6 million in an alleged scam, Initiated reports.

In April, a Coinbase user bought 200 bitcoins, which is now worth around $ 12 million. A notification appeared on the user’s phone stating that their account had been locked, according to Initiated. The notification as if it came from the cryptocurrency investing app, Coinbase. But it was not.

The notification was in fact part of a fraudulent scheme. Investigators said the scheme resulted in the theft of nearly $ 11.6 million in cryptocurrency from the user’s account.

“It is not known how the alleged fraudster learned about the Coinbase transaction and whether the online notification mentioned in the warrant appeared on a phone or computer,” according to Initiated.

The Coinbase user called a number associated with the notification. An unknown person answered the call and changed the user’s account, allowing much of the money to be transferred out of their account.

Cryptocurrency scams remain a potential problem for investors. In early 2021, the Federal Trade Commission said consumers lost $ 80 million in scams. And that was around the start of the year, so you can imagine the numbers have increased since then.

Crypto expert Adam Morris, co-founder of Encryption head, said in an email to Deseret News that scams can be easily identified – if the opportunity seems too good to be true, then it is.

“People should always be wary of platforms offering huge returns,” Morris said. “Never send your money or cryptocurrency to a platform that you don’t fully trust. If you do some quick research, you should be able to assess a company’s reputation online.

“Even if you see big names like Elon Musk supposedly endorsing the investment, don’t take it at face value,” he added. “Scammers are so successful because they use recognizable and reliable names to trick people into believing it’s a good investment when in reality those names have nothing to do with it.”

It’s important to establish your investment goals, spend time researching the cryptocurrency market, and finding platforms that you trust.

“Make sure you’re using an exchange that you trust and doesn’t incur insane fees,” Morris said.

The Financial conduct authority stated that cryptocurrencies can be risky for investment due to market volatility, so it is important to be careful.

“Investing in crypto-assets, or related investments and loans usually involves taking very high risks with investor money” The FCA statement says. “If consumers invest in these types of products, they should be prepared to lose all of their money. “

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