Ed Suman, a retired artist who previously spent almost two decades fabricating iconic pieces of art such as Jeff Koons’ Balloon Dog sculptures, tragically lost his cryptocurrency savings of over $2 million to a scammer posing as a representative from Coinbase. This unfortunate event was reported by Bloomberg on May 17.
Post-retirement, Suman ventured into the world of cryptocurrency investing. Over time, he amassed 17.5 Bitcoin (BTC) and 225 Ether (ETH). This substantial crypto portfolio represented the majority of his retirement savings. Suman kept these assets in a Trezor Model One, a popular hardware wallet used by crypto enthusiasts to mitigate the risk of exchange hacks.
However, in March, Suman received a text message seemingly from Coinbase, alerting him about unauthorized access to his account. He responded and was subsequently contacted by a man claiming to be Brett Miller, a Coinbase security officer. The impersonator demonstrated a deep understanding of Suman’s financial setup, accurately pointing out that his funds were stored in a hardware wallet.
Convincing Suman that his hardware wallet was at risk, the scammer guided him through a “security procedure” which involved inputting his seed phrase into a website that appeared to be Coinbase’s platform. Nine days after this incident, a second scammer posing as a Coinbase representative repeated the process. By the end of this call, Suman’s entire cryptocurrency savings had been stolen.
This scam unfolded in the wake of a significant data breach at Coinbase, which was publicly acknowledged recently. The breach involved attackers bribing customer support staff based in India to gain access to sensitive user data, including customer names, account balances, and transaction histories. Coinbase verified that roughly 1% of its monthly transacting users were affected by this breach.
Among those impacted was Roelof Botha, a managing partner at Sequoia Capital. There’s no evidence suggesting that Botha’s funds were compromised, and Botha has chosen not to comment on the matter. Coinbase’s Chief Security Officer, Philip Martin, has announced that the customer service agents involved in the breach, based in India, have been dismissed. Additionally, Coinbase has committed to paying between $180 million and $400 million in remediation and reimbursement to the affected users.
