Coinbase Sued by Customer Who Says Exchange Refused to Reimburse Him for $96K Lost in Hack

The victim alleges the exchange violated various laws when it failed to pay him for the money he lost.

AccessTimeIconMar 7, 2023 at 4:55 p.m. UTC
Updated Mar 8, 2023 at 9:33 a.m. UTC

Coinbase Inc. (COIN) is being sued by a customer who says the crypto exchange refused to help him after he lost $96,000 from his Coinbase wallet due to a hack, according to a filing in the United States District Court for the Northern District of California San Francisco Division on Monday.

The plaintiff, Jared Ferguson, lost “90% of his life savings” after his phone was hacked, the court filing said. Ferguson lost service on May 9 and T-Mobile technical support told him to get a new SIM card. After restoring service to his iPhone, Ferguson noticed that all the money had been taken from his Coinbase wallet.

The plaintiff immediately contacted Coinbase, which asked him for information about the security of his device, the last authorized transaction and a list of unauthorized transactions. Just over two weeks later, he was told Coinbase could not help him.

“Customers … are responsible for any activity that occurs when those devices or passwords are compromised,” Coinbase told Ferguson in an email, according to the court filing. It added, “Please note you are solely responsible for the security of your email, your passwords, your 2FA codes and your devices.”

Now, Ferguson has brought claims against Coinbase alleging the crypto exchange violated state laws by not crediting his account in full for his losses.

Ferguson alleges that Coinbase violated the Electronic Fund Transfer Act, which was enacted to protect customers engaging in electronic fund transfers, as well as article 4A of the California Uniform Commercial Code, which states that if a bank authorizes an unauthorized order, then it should refund the customer with interest, even though Coinbase is not a bank.

Coinbase "takes extensive security measures to ensure our customer accounts remain safe," the exchange said in an email to CoinDesk. It "encourages customers to take measures to secure their personal accounts and information outside of Coinbase. We educate our customers on how to avoid cryptocurrency scams and report known scams to appropriate law enforcement authorities."

UPDATE: (March 8, 09:32 UTC): Adds Coinbase comment in last paragraph.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.