US Government Files a Lawsuit Against a Phony Coinbase Executive

Kavya  |  Sep 25, 2021

On September 17, a group of officials led by U.S. attorney Tracy Wilkinson files a lawsuit complaint in the United States District Court for the Central District of California, alleging that a citizen was tricked out of more than 200 Bitcoin (BTC) in April 2021 by a phony Coinbase executive.

A Lawsuit Files Against A Phony Coinbase Executive

According to the allegation, an anonymous victim was approached by what looked to be a Coinbase customer executive immediately after purchasing 200 BTC on the exchange for their Colinbase Pro account. 

The accused platform executive stated that the victim’s account has been stopped owing to the magnitude of the purchase that a transaction limit increased was required for the cash to be transferred. 

The scammer also advised the victim to upgrade their Coinbase account to Coinbase Prime.  

The swindler conducted a transaction in which roughly 206 BTC were sent to what they said was the victim’s new Prime wallet after the victim allowed the phony Coinbase executive to their account using a remote desktop application. 

The number of digital assets taken from the victim's Coinbase account approached $11.5 million when combined with many smaller transactions that occurred over the next few hours.

Track The Money

According to the claim, the government is attempting to take the suspect’s assets for the time being before the civil forfeiture case commences. 

Before the funds are restored to the rightful owner, they must first be forfeited to the United States. 

According to Daniel Davis, the partner at Katten Muchin Rosenman LLP, the federal government will have to establish that the funds are liable to forfeiture. 

"This action is one of a growing trend where the federal government is attempting to use its civil forfeiture authority to obtain custody of digital assets. […] One can expect that as interest and trading in digital assets grow, civil forfeiture actions like this one will grow if the government identifies assets it believes were part of illegal activity."

The news should be joyful for everyone in the crypto world, according to David Silver of legal firm Silver Miller, who is engaged in the Cryptsy class action. 

"Stolen digital assets are one of the biggest problems in space, and recovering stolen cryptocurrency is a much-needed solution. I would expect to see more actions like this both from law enforcement and civil litigants.”

The United States Marshal Service or USMS collaborates with Anchorage Digital, digital assets platform to hold and service the digital assets susceptible to civil forfeiture. 

According to certain estimates, the USMS recovered more than 185,000 BTC connected to federal offenses between 2014 and July 2021.

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