Security negligence at Coinbase has drawn legal attention due to user complaints. These complaints resulted in losses of hundreds of millions annually. According to crypto investigation reports by Tanuki42 and ZachXBT on X, scammers use social engineering tactics. These include phishing attacks, spoofed communications, and cloned websites to deceive platform users.
Security vulnerabilities and contributing factors
The main problem with Coinbase stems from its internal security weaknesses. Research shows that the weak points in Coinbase create opportunities for scammers who pretQAzend to be Coinbase supporters through counterfeit emails and false phone systems as well as fake websites.
Users encounter deceptive approaches that lead them to authorize unauthorized payments and expose their confidential credentials without deception. Stolen funds from Coinbase vulnerabilities quickly pass through crypto bridges, mixers, and instant exchanges, making them hard to recover. The annual financial losses exceed $300 million. The investigation found $65 million in damages between December 2024 and January 2025.
Various aspects have provided evidence that confirms this problematic situation. The risk detection systems operated by Coinbase malfunction to identify both legitimate transactions and theft addresses which results in blocked transactions.
Old API key vulnerabilities and issues with SMS-based two-factor authentication led to previous security breaches, weakening user accounts. The problem is made worse by inadequate support services, as users experience delays or no help outside standard U.S. business hours, preventing them from recovering stolen funds.
Coinbase urged to enhance security amid rising losses
Such security loopholes have significant negative effects on operations. The resulting monetary losses erode user trust, leading many to consider alternatives like Kraken and Binance, which offer more secure trading environments. As a result, Coinbase is facing mounting legal troubles and growing regulatory scrutiny due to these high-profile security incidents.
Security experts recommend four strategies to improve Coinbase’s security: asking advanced users for extra phone numbers, identifying weak accounts, implementing real-time fraud detection for theft addresses, and increasing transaction transparency. Enhancing the security approach will generate trust in operations and establish continual customer assistance.
The company maintains strong technical security features. These include cold storage backup for 98% of funds and insurance for hot wallets. However, critics argue these measures cannot prevent future breaches. An active security enhancement program, which will establish new industry marks and secure users from future financial losses, is urgently needed.
