Coinbase Responds to Account Restrictions Amid Fraud Spike

Over the weekend, Coinbase customers took to X (formerly Twitter) to report unexpected account restrictions and delayed support responses. The exchange’s official support handle, @CoinbaseSupport, acknowledged the complaints, attributing the disruptions to a surge in fraudulent activity.

“Please bear with us and don’t believe everything you see on Twitter,” Coinbase Support wrote in a thread.

1/ There’s a lot of FUD/misinformation out there about Coinbase restricting accounts.

— Coinbase Support (@CoinbaseSupport) December 8, 2024

Surge in Fraudulent Attempts

Coinbase cited a significant uptick in fraud attempts following a recent post-election surge in new user sign-ups and account reactivations.

• Fraud Activity Spike: Fraud attempts reportedly increased 2-3x, aligning with increased platform activity.
• Prevention Success: Coinbase claimed its fraud-prevention systems had saved customers “tens of millions” in losses during November alone.

Pseudonymous security researcher @pcaversaccio, a member of the SEAL 911 team, described recent exploits targeting Coinbase users as the work of “script kiddies”—unsophisticated hackers using premade tools.

“Yesterday skiddies (again) decided to fake Coinbase support and drained multiple accounts,” @pcaversaccio posted.

VPN Usage and Security Policies

Coinbase’s handling of VPN usage sparked further debate after Scott Shapiro, Coinbase’s product director, suggested that attackers “always use VPNs.”

Shapiro later clarified that while VPN use alone wouldn’t trigger account restrictions, it could contribute to risk assessments when combined with other suspicious factors—such as:

• Logins from unknown devices or new countries.
• Attempts to send large crypto amounts to new wallet addresses.

Critics, however, pushed back on Coinbase’s stance.

“You are making some of your users choose between financial freedom and physical safety,” wrote Kraken Chief Security Officer Nick Percoco.

Security researcher @pcaversaccio emphasized VPNs as essential tools for user safety, especially on public Wi-Fi networks.

Customer Support Concerns

Amid mounting frustrations, users criticized Coinbase’s delayed support responses during the weekend.

Taylor Monahan, Principal Security Researcher at MetaMask, commented:

“Because, as we all know, crypto operates 9-5 PT Monday-Friday and no one victimizes your users outside those hours either.”

Coinbase Support acknowledged “elevated CX wait times” and a “minor increase in restricted accounts” but assured users that affected accounts were not being ignored.

“That said, if you are restricted, we’re not ignoring you; we’re working hard to respond ASAP,” Coinbase wrote.

Coinbase’s recent account restrictions and fraud surge reflect the challenges centralized exchanges face during periods of heightened activity. While its security measures aim to protect users, ongoing criticisms of its stance on VPN usage and support delays highlight areas for improvement as the platform navigates rising demand and evolving threats.