The number of social engineering scams is increasing, with a focus on targeting users of the cryptocurrency platform Coinbase in the first quarter of 2025. Reports by ZachXBT show that since December 2024, users have lost over $100 million, with annual losses reaching $300 million.
Following investigations into user complaints, BeInCrypto interviewed Coinbase's Chief Information Security Officer, Jeff Lunglhofer, to understand the susceptibility of users to such attacks, how these scams occur, and efforts to prevent them.
During the first quarter of 2025, several Coinbase users fell victim to social engineering scams, reflecting the sophistication of hacks in the crypto industry. ZachXBT's research revealed significant losses, including one individual losing close to $35 million in March alone. Scams between December 2024 and January 2025 resulted in $65 million in losses. The overall issue of social engineering scams at Coinbase costs users $300 million annually.
While Coinbase users are the main targets, other centralized exchanges also face a similar threat from these advanced attacks. The prevalence of these scams underscores the need for collective action to combat them effectively.
Recent years have seen an increase in social engineering scams, particularly in the crypto sector. The FBI reported investment fraud as the leading type of cryptocurrency-related complaints, indicating a 53% rise in losses from the previous year. Scams such as phishing and spoofing have added to the financial impact on users, including those using platforms like Coinbase.
Scammers targeting Coinbase users employ various tactics like creating fake emails and impersonating support calls to deceive victims. The intricate nature of these scams exploits emotional manipulation and highlights the vulnerabilities of centralized exchanges and their users.
Coinbase, along with industry partners, is taking collaborative steps to tackle social engineering challenges. Initiatives like "Tech Against Scams" involve key players in the industry to combat online fraud. Collaboration with other exchanges, addressing theft addresses, and sharing information through groups like Crypto ISAC are part of Coinbase's efforts to enhance security measures.
Despite preventative measures in place, the complexity of social engineering scams demands a balance between user vigilance and the responsibility of exchanges like Coinbase to provide adequate protection and education. Continuous efforts and cooperation within the crypto community are crucial to mitigate the impact of these evolving scams on users.