“Over the past year, thousands of people have lost tens, if not hundreds, of millions in cryptocurrency when gangs of sophisticated scammers whisked their money out of their accounts,” reports the Washington Post, noting the accounts “managed by an app from the publicly traded cryptocurrency giant Coinbase.

“Now those victims are fighting back. Nearly 100 people are trying to hold Coinbase accountable, saying the company didn’t do enough to protect them.”

Scam victims says they notified the company, begging it to fix defects in its Coinbase Wallet software that had allowed the victims unknowingly to grant the scammers access to their accounts. The requests were to no avail, scam victims say.

“They’re trying to be a financial institution without the infrastructure to back it up,” said Eric Rosen, a lawyer at Roche Freedman representing some 96 victims in the arbitration demand, which is akin to a lawsuit, filed against Coinbase. “There were no procedures in place to stop these frauds,” Rosen said. “Of course, scammers quickly picked up on this, and directed victims to download the Coinbase Wallet.”

Many of the victims lost their life savings. The demand says that the rules requiring banks to reimburse debit-card users for unauthorized transfers also should apply to Coinbase’s customers….

If the arbitration demand results in an order that Coinbase reimburse its customers, it provides the possibility of a way forward for the victims of a massive ongoing scam that The Washington Post reported in April had already caused thousands of victims more than $60 million of losses. The individuals participating in the Coinbase arbitration demand, some of whom were scammed as late as this August, say they lost more than $21 million total.

Many were forced by Coinbase Wallet’s terms of service to turn to arbitration instead of challenging them through the U.S. courts. The decision of the arbitrator won’t set a formal legal precedent, but will help answer one of the top questions of the b urgeoning crypto era: Do the existing rules of the financial system apply to cryptocurrency companies?

One more interesting detail from the Post’s article. “Reports from ProPublica and Vice say that at least some of the front-line scammers are themselves victims of human trafficking in Southeast Asia, forced to work under threats of violence.”

Read more of this story at Slashdot.

Source: Slashdot – 96 File Legal Action Demanding Coinbase Reimburse M Lost to Crypto Scammers