Jared Ferguson, a New York resident, is suing Coinbase for $96,000 worth of stolen cryptocurrency from his Coinbase wallet. He claims that the company is responsible for the theft and filed a complaint in San Francisco’s U.S. District Court on Monday. According to the complaint, Coinbase has denied any wrongdoing.
Coinbase, a cryptocurrency platform that provides software for buying, selling, and storing digital assets, has processed $830 billion in trades last year, according to a Securities and Exchange Commission filing. The company was once headquartered in San Francisco but went remote-first during the pandemic and now calls itself a “decentralized company.”
The complaint alleges that Ferguson received a notification from his mobile carrier, T-Mobile, stating that he had requested a new SIM card, which he did not. When he lost service on his phone, he contacted T-Mobile, and the representatives told him that he needed to replace his SIM. The next day, he went to a T-Mobile store and got the card.
Unfortunately, the same day he restored service to his iPhone, he checked his Coinbase account and found that the thieves had transferred nearly $96,000 from his Coinbase wallet, which accounts for 90% of his life savings. It appears that Ferguson fell victim to a SIM card swap, a scam where a criminal initiates a SIM card replacement and gains access to the new card to bypass two-factor authentication protections for banking or social media apps.
Ferguson messaged Coinbase immediately about the unauthorized transfers, but the company told him that he was “solely responsible for the security of [his] email, [his] passwords, [his] 2FA codes, and [his] devices.” He claims that Coinbase authorized the transfers and did not provide him with the documentation of how it decided to deny his dispute. Additionally, Ferguson alleges that Coinbase’s security measures are weak and that its business practices are “immoral, unethical, oppressive, unscrupulous, unconscionable, substantially injurious to the general public, and offensive to public policy.”
Ferguson is seeking damages and restitution totaling at least triple what he lost, despite Coinbase’s legal policy that states it “does not cover any losses resulting from unauthorized access to your personal Coinbase or Coinbase Pro account(s) due to a breach or loss of your credentials.” Coinbase’s user agreement forces customers to waive the right to a trial by jury, but Ferguson’s complaint attempts to push past that.
Coinbase has come under pressure from the Better Business Bureau in the past for poor customer service in the face of account takeovers and lockdowns. In an attempt to make crypto safer from fraud and financial crime, Coinbase published a blog post on Tuesday. Neither Ferguson’s lawyers nor Coinbase responded to requests for comment.
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