Coinbase Accused of Covering Up $25M Loss and Repeated Hacks
BlockTower Capital founder alleges Coinbase concealed security breaches affecting multiple firms.
1High-profile allegations surface
BlockTower Capital founder Ari Paul publicly accused Coinbase on September 29 of losing $25 million belonging to his firm years ago. Paul claims subsequent investigation revealed Coinbase covered up 'massive and repeated hacks' affecting at least a dozen other companies, with over $1 billion allegedly concealed. The allegations come amid multiple ongoing legal proceedings, though specific details remain limited due to these processes.
2Dispute origins and timeline
The controversy gained attention after a user named Kuno claimed on September 26 that Coinbase 'stole' $1.2 million from them a year prior. Kuno stated they filed over 30 support tickets and threatened to release a Google Meet recording if Coinbase didn't respond within 24 hours. Coinbase product head Jordan Fish countered that no matching account could be found, suggesting the post might be engagement bait for a meme token promotion.
3Previous security incidents
Coinbase disclosed a significant breach in May 2025 affecting 69,400 users, where attackers bribed customer support staff to gain internal access from December 2024 to May 2025. Exposed data included identities, contact details, balances, and transaction histories. The company refused a $20 million ransom demand, but the hacker converted tens of millions in stolen ETH into DAI while taunting investigator ZachXBT with a meme.
4Pattern of security concerns
August 2025 saw ZachXBT accuse Tiffany Milanovich of involvement in at least $5 million in thefts, including a $500,000 Coinbase account drain in October 2025. These documented incidents contribute to growing security concerns about the exchange. However, they don't directly substantiate Paul's broader claim about $1 billion in concealed losses, which remains tied to ongoing legal processes he referenced.
5Coinbase's public response
Coinbase Support responded to Paul's allegations on X, stating they sent him a direct message to investigate the claims. The company hasn't provided detailed public comments beyond this initial response. This limited engagement contrasts with Paul's detailed public accusations and raises questions about the exchange's crisis communication strategy regarding serious security allegations.
6Legal implications
The allegations emerge amid multiple unresolved legal proceedings, as noted by Paul. While his claims about $25 million in lost funds and broader cover-ups remain unproven, they could significantly impact Coinbase's reputation in institutional crypto circles. The situation highlights the challenges crypto exchanges face in maintaining trust while handling security incidents and customer disputes transparently.
7Industry context
These allegations occur during heightened scrutiny of crypto exchange security practices and fund management. The claims, if substantiated, could set precedents for how exchanges handle security breaches and customer disputes. They also underscore the importance of robust internal controls and transparent communication in maintaining institutional confidence in cryptocurrency platforms.
8What to watch next
Key developments to monitor include any official Coinbase response beyond the initial X message, updates on the multiple legal proceedings Paul referenced, and potential reactions from institutional investors. The situation may prompt broader discussions about exchange accountability and security standards in the cryptocurrency industry, particularly regarding handling of institutional funds.
Original article: CryptoPotato — Coinbase Accused of Covering Up $25M Loss and Repeated Hacks