67-Year-Old Artist Ed Suman Scammed Out of Over $2 Million in Cryptocurrency Due to Coinbase Data Breach
67-year-old artist Ed Suman was defrauded of over $2 million in cryptocurrency by scammers impersonating Coinbase customer service. He accused Coinbase of failing to alert customers in a timely manner. Despite losing a significant portion of his retirement savings, he has not become a cryptocurrency skeptic. Instead, he praised the scammers for their ingenuity and plans to use multi-signature wallets in the future to secure his assets.
67-Year-Old Artist Defrauded of $2 Million in Cryptocurrency
67-year-old artist Ed Suman was defrauded of over $2 million in cryptocurrency by scammers impersonating Coinbase customer service.
Suman began purchasing cryptocurrency in 2017 and eventually amassed a significant portfolio, including 17.5 bitcoins and 225 ethers, which are now worth over $2 million. This amount constituted a large portion of his retirement savings.
This year, he became one of the victims of a data breach involving the cryptocurrency exchange Coinbase. Coinbase Global Inc. revealed last week that cybercriminals had accessed customer information since January. They obtained sensitive details such as users’ names, addresses, account balances, and transaction histories by bribing customer support agents in India.
Using this highly sensitive information, unidentified criminals initiated social engineering attacks.
How Social Engineering Attacks Work
According to Bloomberg, the 67-year-old resident of Los Angeles stored his cryptocurrency in a Trezor Model One hardware wallet, which many cryptocurrency investors use to avoid losing funds in case of hacking or exchange failures, such as what occurred with Sam Bankman-Fried’s FTX in 2022.
On March 8, he received a text message that appeared to be from Coinbase, notifying him that someone had accessed his account, followed by a call from someone claiming to be Brett Miller from Coinbase’s security department.
The man on the phone knew that Suman had stored his assets in his hardware wallet and convinced him that even though it was not currently connected to Coinbase, the attackers could still access the device. Subsequently, he introduced Suman to a process he claimed would resolve the issue, which involved entering his recovery phrase on a seemingly official website.
Nine days later, Suman received another call from someone claiming to represent Coinbase, informing him that the application process had failed and once again guiding him through the entire procedure. Afterward, Suman’s cryptocurrency disappeared.
Coinbase Should Have Alerted Customers
In its announcement regarding the hacking incident, Coinbase promised to compensate customers who were defrauded by the attackers. However, Suman stated that he has yet to receive confirmation from the exchange regarding compensation.
Previously, Coinbase indicated that only 1% of its monthly trading users were affected by the data breach. The company has implemented mandatory fraud awareness alerts to prevent the success of such attacks.
Suman remarked, “Coinbase should have taken proactive measures to prevent fraud months ago. The most effective thing they could have done would be to email all customers to warn us that someone was impersonating Coinbase customer service. This could have prevented a significant amount of theft. In my view, they have been grossly negligent, and the consequences for me have been severe.”
Data from Elliptic indicates that this week’s Coinbase incident is the eighth largest cryptocurrency hacking event in history, with estimated losses of up to $400 million related to user reimbursements and other expenses.
Insiders revealed that major exchanges like Binance and Kraken also became targets of similar social engineering hacking attempts. However, both platforms successfully repelled the attacks and did not lose any customer data.
Scammers Are Very Skilled; Considering Multi-Signature Wallets in the Future
Nevertheless, Suman stated that his experience has not turned him into a cryptocurrency skeptic. In the future, he plans to use so-called multi-signature wallets, which require multiple signatures to authorize transactions for added security.
Suman said, “I don’t believe the crypto industry should be held accountable for everything that’s happening right now.” He even expressed admiration for the scammers who stole from him.
“I have to admit, when I realized what had happened, I was impressed by the skills of these individuals.”
Risk Warning
Investing in cryptocurrency carries a high level of risk, and prices can be extremely volatile. You may lose your entire principal. Please assess the risks carefully.