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After Falling For A Fake-notification Scam, A Coinbase Customer Lost $11.6 Million In Less Than 10 Minutes

A federal judge authorised a warrant this month to seize more than $600,000 in bitcoin from a Huobi Global wallet after federal authorities said it was part of a $11.6 million haul stolen from a Coinbase account.

According to a complaint filed by the US Attorney’s Office in Los Angeles, in April, after a Coinbase user purchased 200 bitcoin, a notice appeared informing them that their account had been frozen. The notification appeared to be from Coinbase, but it was not.

Instead, the phoney notification was the first step in an alleged scam. According to authorities, about $11.6 million in cryptocurrency, or roughly 206 bitcoin, was stolen from the user’s account in the moments that followed.

It is unknown how the suspected fraudster became aware of the Coinbase transaction, and whether the online notification mentioned in the demand was shown on a phone or computer.

According to a federal complaint filed by investigators last month, the Coinbase user, named only as G.R. in court records, contacted a phone number on the warning, believing it would link him to a Coinbase customer support professional.

According to the lawsuit, a “unidentified individual 1,” or “UI-1,” answered the phone and instructed G.R. to make a series of modifications to the account.

As per lawsuit, one of these adjustments was permitting remote access to the account.

“Once granted access to the Victim Account, UI-1 increased the daily transaction limit and also attempted to deactivate certain notifications and alert settings on the Victim Account,” Dan G. Boyle, assistant US attorney, wrote in a document filed in US District Court in the Central District of California in September.

Within moments, millions in bitcoin and XLM were removed from G.R.’s Coinbase account, investigators said.

“The total value of virtual currency transferred out of the Victim Account between 2:02:40 PST and 2:12:41 PST on or about April 20, 2021, without G.R.’s authorization was approximately $11,570,138,” they wrote in their complaint.

An unknown person then moved the money through a series of transactions across multiple accounts. According to authorities, around 10.2 bitcoin ended up in an account with Huobi Global, one of the world’s major exchanges.

The investigators filed a forfeiture notice in order to reclaim the bitcoins. Huobi Global did not respond to an inquiry for more information.

Judge Dolly M. Gee authorised the warrant request in early October, and a notice was placed in case anyone other than G.R. wished to claim possession of the 10.2 bitcoin.

“Huobi has agreed to maintain a freeze on the funds pending resolution of the forfeiture action,” Thom Mrozek, director of media relations for the US Attorney’s Office in Los Angeles, told Insider via email. “No one has been arrested or charged, but our investigation is ongoing.”