- Coinbase faces a lawsuit in California over frozen crypto linked to a $55 million phishing theft from August 2024.
- The plaintiff is asking a court to declare him the rightful owner of the “traceable stolen funds” held in a Coinbase user account.
- The case highlights a persistent issue in crypto theft recovery, where exchanges often require a court order before releasing frozen assets.
A major cryptocurrency exchange, Coinbase, was sued Monday in a San Francisco federal court over frozen assets allegedly tied to a $55 million phishing theft from August 2024. The complaint argues the exchange holds “traceable stolen funds” laundered through crypto mixer Tornado Cash. Consequently, a Puerto Rico-based plaintiff seeks a court declaration of ownership to recover those assets.
Coinbase has indicated that a court order adjudicating ownership is required before it will release the frozen assets, according to the filing. This requirement underscores a recurring problem in crypto theft recovery, where exchanges freeze funds but await legal rulings. The lawsuit stems from an exploiter who stole $55 million in Dai stablecoins via a sophisticated phishing attack in August 2024.
The malicious Inferno Drainer platform facilitated the exploit, which is a scam-as-a-service tool for digital asset theft. Analytics firms traced the stolen crypto and notified Coinbase that linked funds had entered a retail user account on November 30. Coinbase confirmed the address on December 2 and implemented friction measures to prevent dissipation.
Usage of Inferno Drainer tripled in the first half of 2024, rising from roughly 800 malicious decentralized applications to over 2,400. Meanwhile, the victim contracted crypto analytics platforms to trace the funds, finding evidence linking the laundering to a Ukrainian citizen. The court filing maintains the frozen cryptocurrency is identifiable property traceable to the plaintiff’s stolen assets.
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