Coinbase Staff Impersonator Siphons $1.7M from User’s Wallet

| Updated
by Godfrey Benjamin · 3 min read
Coinbase Staff Impersonator Siphons $1.7M from User’s Wallet
Photo: Depositphotos

Crypto investors are advised to remain vigilant and be on the lookout for phishing emails and links.

An impersonator has been parading itself as a top staff from cryptocurrency exchange Coinbase Global Inc (NASDAQ: COIN). This past week, about three Coinbase users and one crypto user reported the incident, claiming to have received a call from this Coinbase-impersonating scammer. Unfortunately, one of them fell for the trick and allegedly lost $1.7 million in digital assets to the scammer.

Coinbase Impersonator Wrecks Havoc with User’s Seed Phrase

According to Edge & Node co-founder Tegan Kline, who shared the news of his “good friend” who lost $1.7 million, the bad actor coerced the Coinbase user into revealing part of his seed phrase. Apparently, the scammer called, claiming to be from the Coinbase security team. To support his claims, he sent this user an email that looked like something from the exchange.

The email made it look like the victim was having a conversation with a representative from Coinbase. Next, the scammer informed his victim that his wallet was “connecting directly with the blockchain.” This was causing transactions to come out of the wallet, per the scammer’s claim. He proceeded to send another Coinbase-like email which showed an outgoing transaction.

As part of the process to rectify this challenge, the scammer directed the Coinbase user to a website where he would enter his seed phrase. At this point, the victim reckoned that it was not safe to enter his private key but still went ahead to input a part of it. Noteworthy, he did not submit his entry but a few hours later, $1.7 million had been removed from his wallet.

The incident is quite daunting considering that he never submitted the seed phrase. However, Hiro Systems CEO Alex Miller explained what he believed had happened. Miller stated that such websites usually capture data while they are being entered, even without submission.

In his opinion, revealing only a part of the seed phrase was sufficient for the scammer to carry out his illicit operation.

Rise of Crypto Scams with Diversified Approach

The Hiro Systems CEO went on to share his recent encounter with scammers who were also disguised as Coinbase staff. The scammer also employed a similar tactic with him, pushing him to believe that his information may be exposed, citing the CoinTracker email service provider database breach of 2022.

“Specifically, they were using the Coinbase API key connecting to CoinTracker to verify that they were me (in addition to other info),” he said. “At the very least cycle your API keys if you have been using CoinTracker,” Miller advised.

These incidents reflect the rise of crypto scams in the industry. About two weeks ago, blockchain security platform SlowMist reported an increase in crypto scams on The Open Network (TON) and Toncoin ecosystem. Before then, an investor had filed a complaint with the Washington State Department of Financial Institutions (DFI) after losing $310,000 on a cryptocurrency exchange called “Ethfinance”.

Crypto investors are advised to remain vigilant and be on the lookout for phishing emails and links. SlowMist also encouraged crypto users to perform two-factor authentication on their accounts to keep scammers out.

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