Coinbase is facing a lawsuit over frozen crypto linked to a $55M DAI phishing hack, with claims about delayed fund return and ownership disputes.
Coinbase is facing a legal case in the United States over frozen cryptocurrency. The case is linked to a $55 million DAI phishing theft that happened in August 2024. The suit was filed in a federal court in California. It has introduced new awareness on the management of stolen crypto.
Lawsuit Over Frozen Crypto Funds
The case was filed in San Francisco’s court. The stolen crypto was transferred using a tool called Tornado Cash, it says. This was used to conceal the source of the funds.
After that, some of the stolen money was sent to a Coinbase user account. Then, Coinbase saw the suspicious transactions and froze the funds. This was to prevent the money from being transferred again.
But the individual who filed the case claims that Coinbase hasn’t returned the funds. According to the lawsuit, Coinbase has held the money for over a year. It also states that Coinbase has the funds, but refuses to make them available.
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The plaintiff thinks that the frozen crypto is his. He is requesting the court to compel Coinbase to give him the money back. The case also involves an unknown hacker who allegedly stole the funds.
The robbery started with a phishing attack. The attack in this case was carried out by tricking people into stealing approximately $55 million worth of DAI. The hackers then transferred the money to various wallets.
They also employed special tools for concealing the transactions. This made it more difficult to trace the stolen crypto. Subsequently, blockchain tracking was employed to locate part of the money.
Coinbase discovered the suspicious money and froze it. This is a standard measure to prevent illegal money transactions. However, when ownership became a matter of dispute, a problem began. Coinbase said it needs a court order to release frozen funds. For this reason, the case is now in court.
Coinbase Facing More Legal Problems
Coinbase is also facing other legal issues. There have been several class action lawsuits. These cases include claims about frozen accounts and security problems.
The New York Attorney General’s Office is also getting involved. It has raised some concerns about some Coinbase products. It states that some features could be in violation of gambling regulations.
Coinbase was also hit with a case from a U.S. regulator earlier. It was later dropped in 2025. However, the company is still under scrutiny for its services.
Meanwhile, Coinbase is transforming itself. The company is looking to cut approximately 14% of its workforce. It says new technology, like artificial intelligence, is changing its business.
The CEO stated that the company is looking to make itself faster and simpler. So, in the future, it will be smaller teams.
Overall, the lawsuit shows how complex crypto cases can be. It also demonstrates that digital cash can be held for extended periods of time in legal proceedings.
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