Coinbase faces lawsuit over frozen DAI tied to alleged theft

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Coinbase lawsuit over frozen DAI

Highlights

Plaintiff D.B. sued Coinbase and an unknown defendant after losing about $55 million in DAI to a phishing scam on August 20, 2024.
A portion of the stolen DAI was traced to a Coinbase retail account and subsequently frozen, with Coinbase refusing to return the funds absent a court order.
Crypto-related fraud hit a record $11.3 billion in losses last year, representing over half of the FBI's $20.9 billion in tracked internet crime losses.

Complaint details and disputed funds

As first reported by The Block, the plaintiff identified as D.B. filed suit on Monday against Coinbase and a "John Doe" defendant accused of stealing the crypto. The partially redacted complaint closely matches an August 2024 incident in which a crypto whale lost about $55 million in DAI.

The filing says D.B. was caught in a phishing scam on Aug. 20, 2024, after logging into a fraudulent page that gave the attacker access to his wallet. The alleged thief then drained the DAI holdings using Inferno Drainer, a platform the complaint describes as designed to facilitate crypto theft.

A portion of the stolen funds was later traced to a Coinbase retail user account, the filing says, citing blockchain security firm Zero Shadow. The complaint does not disclose how much of the stolen cryptocurrency was held in that account.

Coinbase froze the assets after being notified by D.B., but the exchange declined to return them without a court order determining ownership. Lawyers for the plaintiff argue that Coinbase acted reasonably in freezing the assets, but say its refusal became unreasonable after D.B. submitted sworn proof that he is the rightful owner.

Broader fraud pressure on the crypto sector

D.B. is asking the court to order Coinbase to return the frozen cryptocurrency that can be traced to the theft. His lawyers say he is the rightful owner of the identified assets and is entitled to immediate possession of that property.

Coinbase has not publicly responded in the text provided, and The Block says it has contacted the company for comment. The case highlights the legal and operational challenges crypto platforms face when handling stolen digital assets that are later identified on customer accounts.

The dispute also comes as crypto fraud remains a growing issue across the sector. Losses from crypto-related fraud reached a record $11.3 billion last year, accounting for more than half of the FBI's $20.9 billion in tracked internet crime losses, according to a report released last month.

Our earlier coverage of retail crypto adoption at Consensus Miami highlighted that user trust depends less on technology and more on transparent product design, clear limitations, and meaningful user control. Executives argued that cautious rollouts, strong compliance, and safeguards—especially for first-time investors—are critical as crypto and AI tools reach mainstream audiences.

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