Artists suffer heavy losses due to Coinbase data breach; how social engineering attacks steal your money?

67-year-old artist Ed Suman was scammed out of over $2 million in Crypto Assets by a fraudster impersonating Coinbase customer service due to a data breach at Coinbase. He accuses Coinbase of failing to alert customers sooner. Although he lost a significant amount of retirement savings, he did not become a Crypto Assets skeptic. Instead, he praised the scammers' cleverness and plans to use a Multi-signature Wallet in the future to ensure the security of his assets.

(Coinbase in troubled waters: user personal data leak could lead to a $400 million cleanup, SEC investigates whether user numbers were inflated)

67-year-old artist scammed out of 2 million in Crypto Assets

67-year-old artist Ed Suman was scammed out of over $2 million in Crypto Assets by fraudsters impersonating Coinbase customer service.

Suman started purchasing Crypto Assets in 2017 and eventually accumulated a sum of money, which includes 17.5 Bitcoins and 225 Ethers, and these tokens are now worth over 2 million dollars. This money accounts for a significant portion of his retirement savings.

This year, he became one of the victims of the data breach at the cryptocurrency exchange Coinbase. Coinbase Global Inc. revealed last week that cybercriminals had obtained customer data since January. They bribed the company's customer support agent in India to gain access to detailed information such as users' names, addresses, account balances, and transaction histories.

Using this highly sensitive information, unidentified criminals began launching so-called social engineering attacks.

How does a social engineering attack take place?

According to a report by Bloomberg, this 67-year-old resident of Los Angeles stores his Crypto Assets in a Trezor Model One hardware Wallet, which many Crypto Assets investors use to avoid losing funds during hacks or collapses on exchanges, like Sam Bankman-Fried's FTX in 2022.

On March 8, he received a text message that appeared to be from Coinbase, reminding him that someone had accessed his account, and he received a call from someone claiming to be Brett Miller from Coinbase's security department.

The man on the other end of the phone knew that Suman had stored his assets in his own hardware Wallet and convinced him that even without being connected to Coinbase at the time, the attacker could still access the device. Subsequently, the man introduced Suman to a process he claimed could solve the problem, which involved entering his mnemonic phrase on a website that appeared to be official.

Nine days later, Suman received a call from another person claiming to be a representative, who told him that the application process was unsuccessful and guided him again to complete the entire process. After that, Suman's Crypto Assets disappeared.

Coinbase should have reminded customers earlier.

In an announcement revealing the hacker attack incident, Coinbase promised to compensate customers who were tricked into sending funds to the attacker. However, Suman stated that he has not yet received confirmation from the exchange regarding the compensation.

Previously, Coinbase stated that only 1% of monthly trading users were affected by the data breach. The company has implemented mandatory fraud awareness prompts to prevent the success of such attacks.

Suman stated: "Coinbase should have taken active measures to prevent fraud several months ago. The most effective thing they could have done was to send an email to all customers, reminding us that someone was impersonating Coinbase customer service. This way, they could have stopped a large amount of theft. In my opinion, they were seriously negligent, and for me, the consequences are very severe."

Elliptic data shows that this week's Coinbase incident is the eighth largest Crypto Assets hack in history, with estimated losses of up to 400 million dollars, used to repay user fees and other expenses.

Insiders revealed that its competitors, major exchanges like Binance and Kraken, have also become targets of similar social engineering hacking attacks. However, both platforms successfully repelled the attacks and did not lose any customer data.

Scammers are too skilled, considering using a Multi-signature Wallet in the future.

Nevertheless, Suman stated that his experience did not turn him into a skeptic of Crypto Assets. In the future, he plans to use what's known as a Multi-signature Wallet, which requires multiple signatures to authorize transactions for added security.

Suman said, "I don't think the crypto industry should be held responsible for everything that's happening right now."

He even paid respect to the scammers who stole his Wallet.

I must admit that I was impressed by the outstanding performance of these people after I realized what had happened.

This article discusses how artists have suffered heavy losses due to Coinbase's data breach, and how social engineering attacks can steal your money. It first appeared in Chain News ABMedia.