Trusted by Art, Betrayed by Crypto Scam
Ed Suman, a retired fabricator who spent nearly 20 years contributing to iconic art pieces like Jeff Koons’ Balloon Dog sculptures, found himself the victim of a devastating crypto scam this year. After retiring, Suman invested his savings into cryptocurrency, accumulating a substantial portfolio that included 17.5 Bitcoin and 225 Ether. He stored these assets safely in a hardware wallet, a Trezor Model One, which many crypto holders use to protect their funds from exchange hacks.
However, in March, Suman received a text message that appeared to come from Coinbase, warning him of unauthorized access to his account. The message triggered a series of events that would lead to the loss of nearly $2 million in crypto assets.
The Illusion of Security
The scammer reached out via phone, claiming to be Brett Miller, a Coinbase security representative. The impersonator’s approach was methodical and convincing. By referencing Suman’s hardware wallet, the caller gained his trust and claimed that despite the wallet’s security, his funds were at risk. Suman was then guided through a supposed “security procedure” that involved entering his seed phrase into a fake website designed to mimic Coinbase’s interface.
Suman’s trust in the caller and his unfamiliarity with such phishing tactics led him to follow instructions that ultimately gave scammers full access to his crypto holdings.
A Second Call, A Second Loss
Nine days after the initial call, another impersonator contacted Suman, again claiming to be from Coinbase. The scammer repeated the process, convincing Suman to share his seed phrase a second time on another counterfeit platform. By the end of this second interaction, all of Suman’s cryptocurrency had been stolen.
This two-stage approach reveals the increasing sophistication of crypto scammers, who exploit trust and technical knowledge gaps to manipulate victims into surrendering their most sensitive security information.
Coinbase Data Breach Underlying the Scam
The scam targeting Suman comes amid revelations of a recent data breach at Coinbase, the crypto exchange giant. According to reports, attackers bribed customer support employees based in India to access sensitive user data. The stolen information reportedly included customer names, account balances, and transaction histories, putting millions of users at risk.
Coinbase confirmed that roughly 1 percent of its monthly active users were affected by the breach. The company’s chief security officer, Philip Martin, stated that the involved contracted customer service agents had been terminated following the incident.
High-Profile Impact and Company Response
Among the users potentially affected was Roelof Botha, managing partner at Sequoia Capital and a notable venture capitalist. There has been no indication that Botha’s funds were compromised, and he has declined to comment publicly.
In response to the breach, Coinbase announced plans to provide between $180 million and $400 million in remediation and reimbursements to impacted users. This significant payout reflects the severity of the breach and the company’s commitment to restoring user trust.
The Growing Threat of Crypto Scams
Suman’s case highlights the vulnerability even experienced investors face in the rapidly evolving crypto landscape. As scammers become more adept at impersonating trusted institutions, the importance of safeguarding private information like seed phrases becomes ever more critical.
Experts warn that legitimate crypto exchanges and wallets will never ask users to share their seed phrases or private keys via phone or online forms. Awareness and caution remain essential defenses against increasingly sophisticated fraud schemes.
