Crypto Whale Sues Coinbase Over Frozen $55M DAI Theft Funds

An anonymous crypto whale identified as "D.B." filed a lawsuit on Monday against Coinbase and an alleged thief over the exchange's refusal to return frozen funds linked to an August 2024 crypto theft, according to a court filing. The plaintiff lost approximately $55 million worth of DAI in the incident, which closely mirrors details from a known crypto theft case from that period.

Phishing Attack and Fund Theft

According to the complaint, D.B. fell victim to a phishing scam on August 20, 2024, after logging into a fraudulent page that gave the attacker access to his wallet. The thief drained D.B.'s DAI holdings using "Inferno Drainer," a platform designed to facilitate crypto theft, the filing states.

Funds Traced to Coinbase

A portion of the stolen funds was later traced to a Coinbase retail user account, according to the filing, which cited blockchain security firm Zero Shadow. The specific amount of funds stored in the Coinbase account was not disclosed in the filing.

Coinbase froze the assets after D.B. notified the exchange of the theft. However, the exchange declined to release the funds to the plaintiff without a court order adjudicating ownership.

Legal Arguments

"While Coinbase acted reasonably in freezing the stolen cryptocurrency, its refusal to return the frozen funds to Plaintiff became unreasonable when Plaintiff provided sworn proof that he is the rightful owner and Coinbase refused to act," attorneys for D.B. stated in the filing.

D.B. is seeking a court order requiring Coinbase to return the "traceable" stolen funds. "Plaintiff contends that he is the rightful owner of the identified frozen cryptocurrency traceable to the theft and that he is entitled to immediate possession of that property," the lawyers said.

The Block reached out to Coinbase for comment but did not receive a response at the time of publication.

Broader Crypto Fraud Context

Crypto-related fraud has been increasing, with losses hitting a record $11.3 billion in 2024, accounting for more than half of the $20.9 billion in total internet crime losses tracked by the FBI, according to a report released last month.