Retired Artist Loses $2 Million in Crypto Scam After Coinbase Data Breach

Retired artist Ed Suman, 67, lost over $2 million in cryptocurrency earlier this year after falling victim to a scam involving someone posing as a Coinbase support representative. Suman, who spent nearly two decades as a fabricator in the art world, had turned to cryptocurrency investing after retiring, accumulating 17.5 Bitcoin (BTC) and 225 Ether (ETH) — a portfolio that comprised most of his retirement savings.

Suman stored his funds in a Trezor Model One, a hardware wallet commonly used by crypto holders to avoid the risks of exchange hacks. However, in March, he received a text message appearing to be from Coinbase, warning him of unauthorized account access. After responding, he got a phone call from a man identifying himself as a Coinbase security staffer named Brett Miller. The caller appeared knowledgeable, correctly stating that Suman’s funds were stored in a hardware wallet.

Miller then convinced Suman that his wallet could still be vulnerable and walked him through a “security procedure” that involved entering his seed phrase into a website mimicking Coinbase’s interface. Nine days later, a second caller claiming to be from Coinbase repeated the process. By the end of that call, all of Suman’s crypto holdings were gone.

The scam followed a data breach at Coinbase, in which attackers bribed customer support staff to access sensitive user information. Stolen data included customer names, account balances, and transaction histories. The breach impacted roughly 1% of Coinbase's monthly transacting users. Among those affected was a venture capitalist, managing partner at a prominent investment firm. There is no indication that his funds were accessed, and he declined to comment.

Coinbase’s chief security officer reportedly said the contracted customer service agents at the center of the controversy were based in India and had been fired following the breach. The exchange has also said it plans to pay between $180 million and $400 million in remediation and reimbursement to affected users.

This incident highlights the growing threat of cryptocurrency scams and the importance of vigilance in the digital asset space. The retired artist was deceived into entering their seed phrase on a fake Coinbase website, which allowed the impersonator to gain access to their digital assets. This incident serves as a stark reminder of the risks associated with cryptocurrency investments and the need for enhanced security measures. As the popularity of digital assets continues to rise, so too does the prevalence of scams and fraudulent activities. Investors must remain vigilant and take proactive steps to protect their assets, such as using hardware wallets, enabling two-factor authentication, and being cautious of phishing attempts. The loss of $2 million in cryptocurrency is a significant blow to the retired artist, who had likely invested a considerable amount of time and effort into building their portfolio. The incident underscores the importance of education and awareness in the cryptocurrency community, as well as the need for regulatory oversight to protect investors from such fraudulent activities.