A few days before Christmas last year, Philip Martin sat at his computer checking his cryptocurrency balance. It was the beginning of what would become an ongoing nightmare for him.
Martin told NBC News that he thought he was typing the web address for his cryptocurrency exchange, Coinbase, the largest and best-known company for consumers to store their digital money. But in fact, he says, hackers had forged the URL and modified it so slightly that it even fooled his web browser — prompting him to automatically enter his login and password.
The crooks now had all the information they needed to steal his savings — and they did. Martin became the latest victim of what has been a spate of cryptocurrency hacks and thefts, one that experts say is raising questions about whether better regulation is needed.
“It was very frustrating,” said Martin, who spent $165,000 on Ethereum, a popular cryptocurrency. “I’ve had panic attacks.”
Martin said he was able to find out where the thieves transferred his stolen crypto as all Ethereum transactions are published in a ledger. He contacted both the local and federal police. But to make matters worse, the FBI field office in Los Angeles eventually told him that his loss was not great enough to merit investigation.
“Unfortunately, due to the dollar amount involved in your complaint, management has determined that it does not rise to our required threshold level and that the FBI will not conduct an investigation at this time,” Special Agent Elizabeth Hammond wrote in a message. email Martin provided to NBC News.
Laura Emiller, spokeswoman for the FBI field office in Los Angeles, said she would not comment on a specific case.
“As with many productive and evolving plans, we are not going to arrest or prosecute our way out of this,” she said. “Whether for individuals or companies, education is key. We urge people to visit IC3.gov (The Internet Complaint Center) to familiarize themselves with the latest trends.”
Martin also blames Coinbase, which considers itself a “secure online platform for buying, selling, transferring and storing cryptocurrency.”
“Coinbase is basically saying that they are not responsible and that each user is responsible for securing their own device, laptop or phone,” he said. “These crypto exchanges have no regulations forcing them to stand on the customer’s side and provide protections to help in this kind of situation that I believe they are responsible for because they don’t provide enough cybersecurity themselves. -address.”
A Coinbase spokesperson would not comment on the specific case, saying in a statement that “Coinbase customers should also be wary of phishing attempts and never click on a link or send an email that is not of the domain is Coinbase.com.”
The company added that “scams, fraud and other crimes can have a significant impact on customers, and we take extensive security measures to ensure our customer accounts remain safe. We regularly inform our customers on how to avoid cryptocurrency scams and report known scams to the appropriate law enforcement authorities. We encourage all our customers to take important steps to secure their online accounts. †
The kind of scam that happened to Martin is not the only method by which consumers have lost cryptocurrency. In several cases, crypto exchanges have been hacked. The most famous of these was the Bitfinex breach in 2016, in which hackers recently stole Bitcoin worth an astonishing $4.5 billion. In February, the Justice Department announced it had recovered $3.6 billion.
An analyst has counted at least 46 exchange hacks since 2012. The value of the losses is difficult to quantify given the fluctuation in the value of different cryptocurrencies, but it turns out to be many billions of dollars.
In a recent such hack, crypto trading platform Bitmart promised to use its own funds to recoup customer losses of as much as $196 million.
Attorney Urzula McCormack, a Hong Kong partner of King & Wood Mallesons specializing in cross-border finance and technology, says the threat picture is actually better than it was when crypto first emerged.
“There is no doubt, however, that there are also areas where people are vulnerable,” she said. “There’s a very significant amount of scam activity going on. And we also just have very regular hacking risks that come up that we really need to watch out for.”
In March, President Joe Biden issued an executive order designed to prompt government agencies to take action to protect consumers from crypto risks, and dozens of bills are pending in Congress that would regulate crypto to some degree.
Some countries have banned ads for crypto investments, McCormack said, but these featured prominently in the US during the Super Bowl, highlighting the interest in crypto as an investment.
But Martin urges caution.
“I think there is a lot of potential,” he said. “I just think now I’m personally hesitant to invest until there are better consumer protection laws.”