Avoiding Coinbase Scams (How to Stay Safe in 2022)

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With the rise of cryptocurrency prices and ICOs (Initial Coin Offerings), there has been a significant increase in scams, thieves, and hackers trying to steal your funds.

This article provides general safety information that can be used when dealing with crypto, especially when using Coinbase.


In This Post:


Can you get scammed on Coinbase?

You can, and it’s a very real scam. The answer is yes, just like any service, there are good and bad people using it, and there are criminals.

Scammers are becoming very clever these days, figuring out ways to trick people into giving up their cryptocurrency for nothing in return or tricked into sending the ‘money’ to the wrong address. 

They use social engineering techniques that sound reasonable enough to those who do not know any better and some that even sound convincing to those who know better and should understand better than to fall for this. 

It is crucial not to underestimate the power that a scammer has by just reading words off of a screen and doing as they say because people have lost their life savings.

It has happened before, and it will happen again until people become educated on these matters and take proper precautions to protect themselves. 

Is Coinbase Safe to Use?

Coinbase is considered one of the safest crypto exchanges because it stores 98% of customer assets offline in hardware, software, and paper wallets. Since 2011, all digital coins stored by Coinbase have been insured. Also, Coinbase holds less than 2% of customer funds online at any given time for efficient trading.

The exchange is a member of the U.S. Virtual Currency Exchange Association (JVCEA), which intends to establish transparent industry standards and promote best business practices in the crypto space, emphasizing consumer protection through self-regulation.

Minimum Requirements To Use Coinbase: Digital Wallet, Valid Email Address For Support, Access to Credit/Debit Card, Identification Documentation

Coinbase has strict KYC (know your customer) and AML (anti-money laundering) standards. The company requires users to validate their identities before buying or selling crypto coins on its platform. Coinbase also allows customers from dozens of countries worldwide to use PayPal as a payment method.

Coinbase is not a regulated exchange and has had some difficulties providing customer support to its users due to the influx of online requests. The company says it’s working hard to expand its team quickly.

Can Coinbase Get Hacked?

Yes, Coinbase may get hacked. Hackers may steal your bitcoins when you sign in with an email that has been compromised.

You can prevent this by changing the password for your email account and then signing in to Coinbase again. You should also add two-step verification so no one else can access your account without a second-factor authentication code.

If you don’t have access to your email, you will need to contact [email protected] They may ask for proof of identification, so be prepared to provide them with a photo ID copy or driver’s license (whichever is preferred) and proof of address (such as an official document like a bank statement).

Secure Your Coinbase Account with Two-Step Authentication

You can also add two-step authentication to your Coinbase account. This will require a second code sent to your phone or generated by an authenticator app when you sign in from a new computer or device. You should register more than one mobile number on the settings page so you can receive this code in case your phone is lost or stolen.

If you don’t have access to the phone number, you will need to contact support, and they can remove this from your account so no one else can sign in. This may require proof of ID, so be prepared with a photo ID copy or driver’s license (whichever is preferred) and proof of address (such as an official document like a bank statement). You will also need to provide the email associated with your account so they can verify it is yours and remove this from your account.

1) How Do I Know If My Coinbase Account Is Affected By The Hack?

Your Coinbase account may be affected by the hack if you’re receiving suspicious-looking emails to your email address.

2) How Do I Know If My Coinbase Account Has Been Hacked?

Your Coinbase account may have been compromised due to this recent email hack if you have difficulty accessing your crypto wallets on Coinbase and checking your crypto wallet balances. 

Furthermore, you may have noticed that other personal information on your Coinbase accounts, such as settings or other accounts linked to your Coinbase account, have been changed.

3) Why Should I Check If My Email Has Been Hacked?

You should check for a possible breach of your email because hackers could use this access to gain access to your Coinbase online wallets. 

Check if you can still sign in to your email. If your email has been compromised, you’ll need to contact your email provider and reset or change passwords on all other accounts that may use the same password as with your hacked email account.

4) What Should I Do If My Email Has Been Hacked?

You should contact Coinbase Support through the Coinbase Support Center.

Can Coinbase Wallet Be Hacked?

Yes, the only way someone could access your funds would be if they had access to your Coinbase account, or in the case of a non-hosted wallet, your private key. For this reason, you mustn’t share any login information with anyone else and choose a secure password.

When you create a Coinbase wallet, the company stores 98% of its customer funds in offline storage, or what they call ‘cold storage.’ This means that it is stored on computers not connected to the internet and cannot be hacked. 

However, there are times when these types of wallets need to be connected to the internet, leaving your funds at risk of being stolen.

The most common way to steal cryptocurrencies is by gaining access to someone else’s private keys, which can be done through numerous ways such as hacking an exchange or wallet, phishing scams, and even keylogging (monitoring keyboard strokes) when entering sensitive information.

There are also “fake” wallets that store your private keys on a server, which could lead to you losing access to your wallet and coins if the wallet developers have malicious intentions.

In other words, hackers can’t steal digital currency with a public address alone. 

The only way someone could access your funds would be if they had access to your Coinbase account or private key. For this reason, you mustn’t share any login information with anyone else and choose a secure password.

Can Coinbase Steal Money?

The short answer is no – however, there are some cases where they will restrict you from using your account and cause problems if you try to withdraw funds. In most of these cases, the issue is either fraud or a blatant violation of their user agreement.

In a case of fraud, Coinbase will freeze your account without warning or explanation and refuse to release the funds to you. If you have been defrauded, it’s likely because someone has gained access to your account by either tricking you with a phishing email/link or getting into your email/linked accounts and resetting your passwords.

If this happens, you’ll find yourself locked out of Coinbase with no recourse other than contacting their support team to try to get the account unlocked. The good news is that once they’ve verified, you are who you say you are, it will be resolved quickly without any issues.

There have also been cases where users have violated the Coinbase user agreement for some reason. Coinbase has the right to freeze accounts used in connection with fraudulent activity, even if it’s not directly related to transactions done through Coinbase.

For example – one user set up an account on a friend’s computer and added their debit card information which they then used to purchase Bitcoins on the account. The friend later wanted to remove the card, but the person who added it had already accessed the account and gone through their email to delete correspondences with Coinbase to “hide” all of this activity.

This is not allowed – if you add someone else’s information or attempt to use your account for any actions that are out of the ordinary, then your account could be flagged and frozen while Coinbase investigates. If this happens, you will have to contact their support team and explain what happened. 

In some cases, people have had their accounts reported as being linked to illegal activity by mistake, but this is rarer than the other cases mentioned above. To avoid issues like these, it’s best to keep your account as secure as possible and avoid accessing your account from unknown devices or computers. 

Is My Money Safe on Coinbase?

Your hard-earned money is always safe in your Coinbase wallet. However, it cannot be 100% protected from hackers and other cyber criminals being an online service. This is why Coinbase has insurance for USD balances up to $250,000 to protect its users against any loss caused by a hack or security breach. 

Additionally, Coinbase holds less than 2% of user funds offline in paper wallets to allow easy access if the servers are down. These paper wallets are stored in physical safes that require multiple people to unlock them at once with their key (to prevent one employee from stealing all the coins).

How to Stay Safe When Using Coinbase?

With any digital currency exchange, it is important to use some precautions to ensure your safety. This can be said about Coinbase as well.

Step 1: Use A Strong Password

Your Coinbase password must protect your email and two-factor authentication codes, so it needs to be at least 15 characters long. It should contain capital and lowercase characters, numbers, and special symbols.

If you’re wondering what makes a strong password, this is one of them: !3u$5H0!&yB*1d%gIqb

As long as your passwords are unique to Coinbase and other online entities, they will provide adequate protection for your account.

Step 2: Utilize the Strongest Form of 2-Step Verification

After setting up an initial login password:

  1. Go to ‘Settings’ in the top left corner of the screen.
  2. From here, select ‘Security,’ then click on ‘Two-Factor Authentication.
  3. Scroll down until you see the entry that says ‘Enabled Two Factor Authentication’ — click it to begin generating new two-factor authentication codes. You’ll get a message that says, ‘A one-time use password will be generated and displayed on the screen’ — write it down.

Step 3: Secure Your Email

One of the most important steps towards securing your cryptocurrency accounts with strong passwords and 2FA is ensuring that email addresses connected to those accounts are similarly protected. 

A hacker who gains access to one of your emails can easily use password resets on all of your online services, something that’s much more difficult to do if your email account itself is locked down.

To secure your Coinbase email address, go to ‘Settings,’ then scroll down and click on ‘Email a backup of my account,’ which will generate a new set of login credentials for this email address. 

Make sure that the password you create here is different from all other passwords, either by changing some characters or adding symbols, etc. but make sure it’s still easy for you to remember.

Step 4: Lock Down Your Mobile Account

While most security experts won’t recommend using mobile apps for cryptocurrency accounts because they can be hacked relatively quickly compared to computers, some advantages come with having a mobile wallet at your disposal. 

That being said, it’s essential to understand that unless you secure your phone against malware attacks, no matter how many times you change your password on Coinbase, nothing is guaranteed.

If you have Android, make sure that your device is running the latest OS because older versions are more vulnerable. 

If you have an iPhone, setting a passcode for your device is another easy way of protecting yourself, which can be done by going into ‘Settings’ then scrolling down and selecting ‘Touch ID and Passcode.’ 

Once this is set up, whenever the phone unlocks, it will require that code before allowing access to any other data on the phone, this also applies for iPhones with Face ID.

Step 5: Keep Your Devices Clean and Updated

Whether it’s Android, iOS, Windows, Linux, or anything else, chances are both your computers) and mobile devices are susceptible to malware attacks. 

This is why it’s essential that you’re always up to date with the latest versions of your OS and apps, running outdated software can open you up to dozens of security vulnerabilities which are only getting worse as time goes on.

On top of this, it’s also recommended that you install reputable antivirus software since crappy programs will often give users a false sense of security while doing nothing at all. 

When it comes down to protecting your devices, running one antivirus suite is about as good as running thirty different ones, if not less effective, so make sure you choose wisely.

Step 6: Protect Your Cloud Storage Accounts

Cryptocurrency exchanges like Coinbase barely store any user data for extended periods, so there’s effectively no need to worry about this even on a security level. 

However, you must secure your cloud storage accounts as hackers will often use these as a way of gaining access to your email address first.

If you’re using iCloud, make sure that you not only set a strong password but enable 2-factor authentication as well. Google Drive has been more susceptible to malware attacks if you have an Android device. 

If possible, avoid getting anything from unknown sources and always check permissions before installing any app.

Step 7: Bookmark Coinbase

The best way to protect yourself from phishing scams is to not click on links sent to you by anyone. This includes links posted by friends and family members, but it also applies if a random person approaches you offline, claiming they’re from your bank or something similar.

Whenever possible, always open a new browser window and type the website directly into the bar rather than clicking any links that come via email or text messages, this can be done by holding CTRL then hitting enter.

It would help if you even did this when purchasing cryptocurrency because while exchanges like Coinbase take security very seriously, there’s always the chance of someone compromising their servers in some way. 

If this does happen, make sure to disconnect your account immediately until all issues are resolved which you can do by going to https://support.coinbase.com/customer/portal/emails/new and selecting ‘Money, Privacy & Data in the subject line.

Step 8: Stay Alert for Phishing

Last but not least, you must constantly be on the lookout for phishing scams, mainly because they’re getting more advanced by the day. 

For example, a phony link could be sent from your friend asking if you want to see something that sounds too good to be true, which is often how these things start — don’t click on anything like this.

The best way to protect yourself against this kind of attack is simple; only ever go online using secure protocols such as HTTPS or SSL where possible. 

Sites like Gmail are fully protected, but if you’re not using a device connected to the internet through your place of work or some other secure location, make sure that you open all websites at home first.

What Should I Do If I Get Scammed on Coinbase?

When a scam occurs, the first thing you should do is report it to Coinbase Support.

To ensure that your reports are handled adequately by Coinbase Support, Below is a list of things you can do before and after submitting your ticket. Read on for more information.

Before Submitting A Ticket To Coinbase:

As soon as you become aware that some unauthorized party has access to your account or is trying to take over any of your accounts on an exchange – all of which could have been prevented if only two-factor authentication had been enabled – immediately block all attempts from new devices and IP addresses from accessing your account using the appropriate methods. 

If they manage to get in before you block them, do not try to stop their withdrawals or anything else – get out and report it immediately.

Reporting a suspicious login attempt begins with navigating to the “Accounts” page in Settings. From there, find the affected account and press to open the dropdown menu. 

After selecting “Report an Unauthorized Transaction,” you will be presented with a dialog box that asks if you would like to report unauthorized access or transactions related to this account:

Click “Submit” once you’ve selected the type of report you’d like to make. 

Coinbase Support will review your request and reply as soon as possible. The more details you provide when describing how the transaction occurred, including what was compromised and what actions were attempted, the more helpful your report will be. 

If you’re unsure whether or not there was unauthorized access to your account, you can always submit a request, and they will look into it for you.

How to Report Crypto Scams

Are you the victim of a crypto scam? Have you lost your hard-earned cold, hard crypto to some dirty scammer that promised you would be rolling in it today if only you sent them 5 ETH? Well, have no fear! There are several steps on how to report a crypto scam. 

Give As Much Detail As Possible

The first step to reporting a scam is to figure out what type of scam it is and who you should report it to. Many scams involve multiple groups and agencies, but there are four main types: Securities Fraud, Wire Fraud, Investment Scams, or Online Consumer Scams. Here’s how to figure out which one applies.

1. Securities Fraud

If the scam involves an investment offer used to con investors out of money by using false premises or promises about your return on investment, then that’s securities fraud. In this case, the best agency to contact is the U.S. Securities & Exchange Commission (SEC). You can file complaints through their online form at.gov/tcr/.

2. Wire Fraud

This type of scam involves money transfers or online transactions, and you should contact the U.S. Department of Justice’s (DOJ) Internet Crime Complaint Center (IC3). They will take your complaint and then share it with the appropriate law enforcement agency. You can submit your info here: https://www.ic3.gov/default.aspx.

3. Investment Scams

If the scam involved someone trying to sell you a commodity, security, or investment opportunity where the seller misrepresented what they were selling, this is considered an investment scam. 

The Commodity Futures Trading Commission (CFTC), which regulates those kinds of investments at the federal level, would be your best bet for taking action. You can file a complaint through the CFTC’s online submission form at https://www.cftc.gov/ConsumerProtection/FileAComplaint/

4. Online Consumer Scams

If you paid for something online but never received your purchase or were otherwise cheated out of money, then your best bet is to contact the Federal Trade Commission (FTC). 

They handle complaints about everything from imposters on social media to $1 rental scams. Here’s how to submit an online consumer scam complaint: https://www.ftccomplaintassistant.gov/#&panel1-1.


Wrapping Up

Finally, regardless of the above information, it is recommended to take appropriate precautions when using Coinbase or any other Bitcoin exchange service. These include: Always use https://www.coinbase.com.

When entering login credentials into a login form on an external site (not Coinbase), make sure that the site is secure and shows the lock icon next to the address bar as well as HTTPS in front of the URL of the website you are on. 

ONLY enter your login information into the login page of Coinbase itself. As a last resort, you can contact their support team with a link showing them what is going on if you feel they need more information regarding phishing sites.

Reference

  1. https://www.consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams
  2. https://help.coinbase.com/en/coinbase/privacy-and-security/avoiding-phishing-and-scams/avoiding-cryptocurrency-scams
  3. https://finbold.com/guide/is-coinbase-safe/#:~:text=While%20it%20is%20never%20100,storage%20that%20cybercriminals%20cannot%20access.
  4. https://help.coinbase.com/en/coinbase/privacy-and-security/account-compromised/my-account-was-compromised
  5. https://www.quora.com/Is-Coinbase-a-secure-place-to-store-my-cryptocurrency#:~:text=While%20it%20is%20never%20100,storage%20that%20cybercriminals%20cannot%20access.
  6. https://help.coinbase.com/en/coinbase/privacy-and-security/data-privacy/how-can-i-make-my-account-more-secure

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