Stoltmann Law Offices Wins Arbitration Award Against Coinbase, Inc. for a Client Who was the Victim of an Account Takeover Fraud
SOURCE Stoltmann Law Offices
CHICAGO, Dec. 2, 2025 /PRNewswire/ -- Stoltmann Law Offices announces Arbitration Ruling Against Coinbase, Inc. (COIN stock symbol). An Arbitrator from the American Arbitration Association has ruled that Coinbase was grossly negligent relating to its failure to protect and respond to an attack on a Coinbase customer's account that resulted in the theft of his cryptocurrency. The Coinbase customer was awarded compensatory damages, plus interest. This is believed to be the first successful recovery of damages related to Coinbase's failure to protect its customers from known criminal attacks on customer accounts in the country.
In the reasoned award before the American Arbitration Association, AAA Case No. 01-24-0002-4141, the arbitrator made specific findings that Coinbase failed to act to protect the Claimant's account despite the existence of "red flags" that there was anomalous activity occurring. The arbitration award comes after three days of hearings, prehearing briefs on the law, and multiple rounds of post-hearing briefing. The Arbitrator determined that Coinbase's processes and procedures for detecting unauthorized account activity failed and fell below the standard of care, specific to the use of an API intended for accessing a customer's account.
According to Chicago attorney Andrew Stoltmann, one of the attorneys who tried the case against Coinbase, "Coinbase markets that it protects customer accounts and takes actions to prevent fraudulent account takeovers and customers rely on those representations. In this case, the Arbitrator ruled that Coinbase has a responsibility to act." Sara Hanley, co-lead counsel added, "In our complaint, we alleged Coinbase failed to act in the face of numerous red flags that our client's account was under attack through a coordinated account takeover conducted by abusing an API that was intended to be used for tax preparation and not trading or transferring funds. Coinbase's inability to recognize and act upon red flags related to fraudulent transactions was found to be problematic by the Arbitrator."
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