Major CEX Blames User, Refuses To Refund $96,000 Lost Due To Security Breach

Coinbase has reportedly refused to take responsibility for a security breach that resulted in the loss of approximately $96,000 from its customer's account.

The report came from Bloomberg, which cited a Coinbase account holder who claimed he lost almost all his savings and sued the platform in an attempt to recover the funds that went missing due to a hack.

Jared Fergusson, of Staten Island, New York, discovered he lost around $96,000 last year after he received a notification from his mobile carrier in May informing him about a SIM card change, which he did not do.

After the service was restored to his iPhone when he used a new card, he realized the savings in his Coinbase account were all gone.

Fergusson was expecting Coinbase to refund his funds lost due to the unauthorized withdrawal but it did not happen. Instead, the exchange, in an email to the account holder, "disclaimed any responsibility for the hacking of its customers' accounts," Ferguson revealed.

"Please note you are solely responsible for the security of your e-mail, your passwords, your 2FA codes, and your devices," the crypto exchange platform told Fergusson, according to a complaint filed in San Francisco federal court Monday.

Ferguson sued Coinbase for the losses he incurred because of a security breach that happened in May 2022.

The person claimed under both state and federal laws, the crypto exchange platform, considered the largest CEX in the U.S., should take responsibility for the unauthorized withdrawal, adding that Coinbase, or its security procedure, failed to hold what he called "obviously fraudulent and unauthorized transactions."

The unauthorized withdrawals drained his Coinbase account in just a matter of eight hours, which allegedly started immediately after his password was reset and his account was accessed from an IP address not associated with his account and from a new device.

This was not the first time Coinbase was sued for its alleged lapses in security.

In August 2022, the crypto exchange platform was slapped with a class-action lawsuit filed in the U.S. District Court for the Northern District of Georgia for its failure to properly secure customers' accounts, which left them vulnerable to theft and unauthorized transfers.

In 2021, another Coinbase account holder lost $7,200 in a SIM swap attack and like Fergusson's case, the crypto exchange platform refused to reimburse the losses.