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This Coinbase user lost $11.6 million in a cryptocurrency scam

Coinbase user lost 200 bitcoin in an alleged scam

The mobile phone icon for the Coinbase app.
The mobile phone icon for the Coinbase app is shown in New York on Tuesday, April 13, 2021. A federal judge this month approved a warrant to get back more than $600,000 in bitcoin after investigators said a Coinbase user lost $11.6 million in an alleged scam, Insider reports.
Richard Drew, Associated Press

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

In April, a Coinbase user bought 200 bitcoins, which is now worth about $12 million. A notification popped up on the user’s phone that said their account had been locked, according to Insider. The notification looked like it had been from the cryptocurrency investing app, Coinbase. But it wasn’t.

The notification was actually a part of a fraud scheme. Investigators said the scheme led to almost $11.6 million in cryptocurrency being stolen from the user’s account.

“It’s unclear how the alleged fraudster knew about the Coinbase transaction and whether the online notification mentioned in the warrant appeared on a phone or computer,” per Insider.

The Coinbase user called a number associated with the notification. An unknown individual 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 issue for investors. Early in 2021, the Federal Trade Commission said consumers lost a combined $80 million in scams. And that was toward the beginning half of the year, so you can imagine numbers have climbed since then.

Crypto expert Adam Morris, co-founder of Crypto Head, said in an email to the Deseret News that scams can be identified easily — if the opportunity sounds 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 you don’t completely trust. If you do some quick research you should be able to gauge online how reputable a company is.

“Even if you see big names like Elon Musk supposedly endorsing the investment, do not take this at face value,” he added. “Scammers are so successful because they use recognizable and trusted names to dupe people into believing it’s a sound investment when really these names have no association to it at all.”

It’s important to establish your investment goals, dedicate time to research the cryptocurrency market and find platforms you trust.

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

The Financial Conduct Authority has said that cryptocurrencies can be risky for investment because of the volatile market, so it’s important to be cautious.

“Investing in cryptoassets, or investments and lending linked to them generally involves taking very high risks with investors’ money,” FCA’s statement said. “If consumers invest in these types of product, they should be prepared to lose all their money.”