ZachXBT, a well-known blockchain investigator, recently posted on Telegram and reported that a Coinbase user had $34.9 million stolen from their account in a very sophisticated scam. As per the Telegram post, this incident is a part of a larger trend, where over $46 million have been stolen from Coinbase users this month alone.
ZachXBT explains how the hack was Executed
The stolen 400.099 BTC were first converted to Ethereum using Thorchain and Chainflip. This Ethereum was then converted into a stablecoin known as the DAI.
Surprisingly, there has not been a single concern raised by Coinbase, nor has the exchange flagged an of the addresses associated with the stolen funds in their compliance tools.
Such negligence raises concerns and questions about how the exchange handles these kind of scams and indicates how important user protection is to the exchange.
ZachXBT previously had highlighted that Coinbase users may be losing up to $300 million annually due to such social engineering attacks. According to ZachXBT’s recent analysis, he highlighted the fact that the total losses for user have been significantly underreported to law enforcement agencies or there is a possibility that these reports are not being captured by the internal systems of Coinbase.
Previous Hacks on Coinbase
In the past, there have been significant incidents of scams and hacks where Coinbase users have been involved. In 2021, around 6,000 customers lost funds due to attackers exploiting vulnerabilities in the SMS-based multi-factor authentication system.
Moreover, there also has been a phishing attack which led to $37 million being stolen from the users who were tricked into providing their credentials on a fake Coinbase website. There also has been an impersonation scam that have targeted Coinbase users the most.
Need of Security and Awareness
ZachXBT has been critical of Coinbase as the exchange has never taken action to protect its users from these scams. The investigator thinks that lack of action from the exchange is the sole reason of these frequent scams.
With this incident, one thing is clear, that there is a need for enhanced security protocols and user education within the crypto space. The ongoing investigation by ZachXBT not only aims at getting back the stolen funds but also sheds a light on the loop holes and vulnerability within cryptocurrency exchanges like Coinbase.
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