Coinbase Lawsuit for Crypto Scam Victims [2025 Update]

How Scammers Use Coinbase in the Flow of Funds (and Where It Fits)

For many victims of crypto fraud, Coinbase is simply the starting point – the place where digital currency is first purchased before being transferred into the hands of crypto scammers.

Scammers exploit the credibility of major crypto exchanges like Coinbase by instructing victims to buy legitimate crypto assets, then move them off-platform to addresses they secretly control.

This makes Coinbase the “on-ramp” to a larger investment scam, not the platform where the fraudulent activity actually occurs.

Victims often believe they’re transferring funds to a legitimate trading partner, only to discover later that they’ve sent stolen cryptocurrency into untraceable wallets.

The scammers typically operate through fake websites or mobile apps that mimic real investment dashboards, showing fabricated balances to reinforce trust.

Once the victim tries to withdraw, the platform locks up or demands additional payments disguised as taxes, fees, or identity verification steps.

These scams appear in various forms, but the pattern is remarkably consistent: a legitimate purchase followed by carefully orchestrated theft.

Understanding how this flow works is essential for cryptocurrency law firms investigating recovery options and identifying potential links to existing law-enforcement seizures.

How these scams commonly use Coinbase as an on-ramp:

1. The scammer poses as a romantic partner, mentor, or investment advisor, gaining the victim’s trust.
2. The victim is encouraged to open an account with Coinbase to purchase cryptocurrency.
3. The scammer provides an external wallet address or link to a “trading” or fake website that appears legitimate.
4. The victim sends the crypto (often Bitcoin, Ethereum, or USDT) off Coinbase to the provided wallet.
5. The scammer then transfers the currency through multiple wallets or mixers, removing the link to the victim’s account.
6. The victim sees rising “profits” on the fake platform, but withdrawals are blocked or delayed.
7. The scammer demands additional deposits or fees, citing regulations or account upgrades.
8. Once the victim stops paying, communication ends and the platform disappears.

These actions represent fraudulent activities carried out by third parties, not Coinbase itself.

While authorities have traced some scam funds through Coinbase and other exchanges, the platform’s role is limited to facilitating a legitimate purchase initiated by the user.

Coinbase does not hold or manage private wallets once users move crypto to external addresses, meaning the private keys are no longer within its control.

For this reason, there is currently no active lawsuit against Coinbase related to romance or pig-butchering scams.

Instead, recovery efforts focus on cooperation between law enforcement, exchanges, and cryptocurrency law firms to identify and trace stolen funds.

What Coinbase Actually Does in Seizures and Government Cases

When law enforcement seizes assets connected to large-scale crypto scams, Coinbase’s role shifts from a retail exchange to a trusted institutional partner within the cryptocurrency industry.

The platform has been selected by the U.S. Marshals Service to safeguard seized digital assets, ensuring the security and integrity of this vital currency during ongoing investigations and forfeiture proceedings.

Coinbase also collaborates with the appropriate authorities, including the Financial Crimes Enforcement Network (FinCEN), to promote transparency and compliance across the ecosystem.

While it does not act as an investigator or recovery agent, Coinbase’s infrastructure and compliance programs make it a valuable resource when agencies manage and store seized cryptocurrency.

These partnerships are critical to maintaining accountability and providing structure in complex cryptocurrency recovery efforts that aim to return funds to those who have fallen victim to fraud.

What Coinbase does in government seizures and recovery cases:

• Safeguards seized cryptocurrency assets under agreement with the U.S. Marshals Service.
• Maintains custody and valuation of assets until forfeiture or restitution proceedings conclude.
• Works with FinCEN and other agencies to meet reporting and anti-fraud obligations.
• Implements strict security measures to protect digital wallets under government control.
• Supports law enforcement transparency through cooperation and verified data sharing.
• Assists indirectly in cryptocurrency recovery by ensuring seized assets remain secure until lawful distribution.

Can I Sue Coinbase?

In most cases, victims of cryptocurrency fraud cannot successfully sue Coinbase because the platform itself is not responsible for transfers that users authorize to external wallets.

Once funds leave the exchange, they are outside Coinbase’s control and often become part of a wider fraud network operating across multiple jurisdictions.

Coinbase functions as a legitimate exchange, and its user agreement generally limits liability for losses caused by third-party scams.

However, in rare cases where legal action might be viable (such as a verified security breaches, identity theft, or failure to comply with specific obligations), an attorney can review the facts and determine whether a claim is possible.

Most recovery efforts focus instead on tracing assets and working with federal agencies that manage seized funds tied to scam operations.

Law firms pursuing these cases do so on behalf of victims by building evidence-based petitions, not by suing the exchange directly.

The most realistic pathway to recovery usually comes through cooperation with law enforcement and established forfeiture channels, not through litigation against Coinbase.

Real Recovery Comes From Seizure & Forfeiture, Not Suing Coinbase

When crypto assets are traced to fraudulent networks, recovery usually depends on seizure and forfeiture proceedings initiated by law enforcement, not private lawsuits.

Agencies such as the Federal Bureau of Investigation and local law enforcement work together to identify and freeze wallets containing funds linked to large-scale crypto scams.

Once assets are secured, cases move through state and federal courts, where victims may later become eligible to file petitions for remission or restoration.

This structured process allows for legitimate oversight and the potential redistribution of seized funds to verified victims.

How recovery works in seizure and forfeiture cases:

• Investigation and tracing: The Federal Bureau of Investigation and other agencies follow blockchain data to locate stolen assets.
• Asset seizure: Courts approve warrants to freeze cryptocurrency wallets connected to criminal activity.
• Forfeiture proceedings: The government initiates formal actions in state and federal courts to take ownership of seized property.
• Public notice and victim claims: Verified victims may be notified and allowed to file for remission or restoration.
• Distribution: If approved, funds are released back to victims through established government channels.

What To Do Right Now If You've Fallen Victim to a Cryptocurrency Scam

If you or someone you know has fallen victim to a crypto romance or pig-butchering scam, immediate action can make the difference between permanent loss and potential recovery.

Start by preserving all possible evidence and documenting each interaction or transaction; this information may later connect your case to a law enforcement seizure.

Because cryptocurrency operates as a virtual currency within a global ecosystem, every detail you keep may assist investigators and legal teams in tracing assets.

The situation can evolve quickly, so staying informed about the latest developments in cryptocurrency recovery and enforcement efforts is essential.

Your goal is to gather evidence, report the fraud to the correct agencies, and avoid any further financial exposure.

Acting promptly helps establish credibility with investigators and improves your chances of being included if funds tied to your case are recovered.

Actionable steps for victims and families include:

• Preserve evidence: Save TXIDs, Coinbase transaction history, bank wire or ACH records, and screenshots of chat messages or “investment” dashboards.
• Report the crime: File a complaint with the Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3) and save the report number.
• Notify Coinbase: Use the Help Center or Alert Number to report fraudulent activity and secure your account.
• Contact your bank: Alert the fraud unit and request a hold or recall of recent transfers, if possible.
• Stop paying “fees” or “taxes”: Do not send additional money to unlock or recover supposed funds.
• Consult legal counsel: Work with lawyers experienced in seizure-based recoveries to determine whether your losses may be linked to an active forfeiture case.
• Remain available: Stay in touch with investigators or law enforcement officials who may contact you as part of a larger recovery operation.

Additional Risks for Cryptocurrency Fraud Victims

Victims of cryptocurrency scams often face more than the initial financial loss.

The aftermath can open the door to secondary frauds and ongoing exploitation.

Many individuals who have already lost money in Ponzi schemes, pump and dump schemes, or fake ICOs are later targeted again by fictitious law firms or “recovery specialists” promising to reclaim stolen funds for an upfront fee.

These impersonators use convincing websites, logos, and even spoofed phone numbers to appear credible, preying on desperation and confusion in the wake of financial loss.

Because cryptocurrency regulation remains a developing area of law, scammers exploit uncertainty around enforcement, refunds, and restitution processes to their advantage.

In some cases, victims also face heightened exposure to identity theft after a data breach or through phishing tactics that collect personal and financial details under the guise of recovery assistance.

For reputable practice areas such as financial fraud, asset recovery, and consumer protection, legitimate lawyers and investigators never demand payment to “unlock” or “verify” funds.

Victims should verify the credentials of any entity offering help, confirm bar registration for law firms, and avoid sharing sensitive information without independent verification.

Staying alert to these secondary scams protects both your remaining assets and your privacy while you pursue legitimate recovery efforts.

TorHoerman Law: Investigating Cryptocurrency Fraud Recovery for Victims and Families

At TorHoerman Law, we work tirelessly to help victims and families understand their options after falling prey to cryptocurrency fraud.

Our attorneys analyze transaction records, liaise with law enforcement, and evaluate whether losses may connect to seized assets or active forfeiture actions.

We focus on clear communication, detailed evidence review, and protection from secondary recovery scams that often target those already harmed.

Cryptocurrency recovery is complex and rarely guaranteed, but experienced legal representation can make a measurable difference in how a case is documented, reviewed, and considered by authorities.

If you or a loved one has been affected by a cryptocurrency scam, contact TorHoerman Law today for a confidential consultation.

Our team will review your situation, explain potential recovery pathways, and guide you through the next steps with professionalism, diligence, and an unwavering commitment to justice.