Arbitration Complaint Against Coinbase for Unauthorized Crypto Transfers, Elder Abuse, and Security Failures Filed in AAA
MDF Law PLLC has filed a demand for Arbitration against Coinbase, Inc. on behalf of a senior citizen whose cryptocurrency was stolen following an unauthorized account takeover. The claim—filed with the American Arbitration Association under its Consumer Rules—alleges widespread security failures, unlawful business practices, violations of federal and state law, elder abuse and unconscionable contract terms.
Summary of the Allegations
A Senior Citizen’s Account Was Compromised
The claimant, an elderly Coinbase customer, used cryptocurrency as a personal savings vehicle—not as a speculative investment. After unauthorized actors gained access to the account, significant funds were transferred out without consent. Coinbase refused to reimburse the losses.
The arbitration alleges that the breach occurred only because Coinbase failed to secure the customer’s personal information, allowing attackers to obtain the data needed to access the account.
Elder Fraud Complaint Against Coinbase
Key Legal Claims Against Coinbase
1. Electronic Funds Transfer Act (EFTA) Violations
The arbitration argues that Coinbase qualifies as a “financial institution” under federal law and is therefore required to reimburse customers for unauthorized electronic fund transfers, even if the customer acted negligently. Federal law is clear: when access credentials are obtained through fraud, transfers are unauthorized—and the exchange must refund the victim.
2. Violations of UCC Article 4A
In the alternative, the claim argues that Coinbase failed to implement commercially reasonable security procedures for verifying transfers, as required by California’s Uniform Commercial Code. Coinbase allegedly executed payment orders that were not authorized by the claimant.
3. Unfair Business Practices (California Business & Professions Code § 17200)
Coinbase heavily markets its platform as secure, citing proprietary tools like Coinbase Tracer and “dynamic” risk-scoring systems. The arbitration alleges these representations are false and misleading, because the monitoring systems failed to detect the account takeover or block suspicious transfers.
4. California Consumer Privacy Act (CCPA) Violations
Coinbase allegedly failed to maintain reasonable security measures, allowing sensitive consumer data to be accessed and used by criminals. This triggers the CCPA’s private right of action for statutory damages.
5. Declaratory Relief – Unconscionable Contract Terms
The filing challenges Coinbase’s constantly changing terms of service, arguing that the company updates its contract multiple times per month without notifying customers. This practice, combined with unilateral liability waivers, is alleged to be both procedurally and substantively unconscionable.
6. Breach of Third-Party Insurance Obligations
Coinbase publicly represents that it carries crime insurance for losses caused by hacking and employee wrongdoing. The claimant alleges Coinbase failed to submit the theft to its insurance carriers despite advertising this protection.
7. Breach of Contract
Coinbase promises to securely custody customer assets using pooled blockchain addresses and enhanced security protocols. The arbitration argues Coinbase failed in this duty by allowing unauthorized transfers.
8. Gross Negligence
The claim outlines failures across five major regulatory and cybersecurity frameworks, including:
- Gramm–Leach–Bliley Act (GLBA)
- FinCEN anti-money-laundering guidance
- Coinbase’s internal fraud-prevention policies
- NIST cybersecurity standards
- State-level regulations such as New York’s 23 NYCRR 500
The arbitration asserts these were not isolated oversights but systemic failures.
9. Elder Financial Abuse
Because the claimant is a senior citizen, the arbitration invokes California’s Elder Abuse and Dependent Adult Civil Protection Act. If Coinbase knew—or should have known—that a third party was exploiting a senior, it may be liable for attorneys’ fees, costs, and potentially treble punitive damages.
Damages Sought
The claimant seeks:
- Full reimbursement of stolen cryptocurrency
- Treble damages under EFTA
- Attorneys’ fees and costs
- Restitution
- Punitive damages
- Any additional relief deemed appropriate by the arbitrator
Crypto Attorney Discussing Coinbase Arbitrations
If You Lost Cryptocurrency on Coinbase, MDF Law Can Help
If your cryptocurrency was stolen or your Coinbase account was accessed without permission, do not wait. These cases are time-sensitive. Contact MDF Law immediately for a free, confidential review of your claim.
Our firm has recovered millions for victims of financial fraud, and we stand ready to fight for you.