Coinbase Faces Lawsuit Over $55M Frozen Funds

A lawsuit has been filed against Coinbase in California federal court, alleging the exchange withheld frozen cryptocurrency linked to a $55 million DeFi Saver hack. The plaintiff is seeking a court order to establish ownership of the assets and compel Coinbase to release them.

The funds were stolen through a sophisticated phishing scam in August 2024 and were subsequently laundered through the Tornado Cash mixer before being deposited into the Coinbase account. According to the complaint, Coinbase acknowledged holding the 'traceable stolen funds' but stated it would only release them following a court order adjudicating ownership.

The case highlights the recurring challenge exchanges face in handling stolen funds and the need for clear protocols. Exchanges often freeze assets flagged as stolen but require legal judgments before returning them, leaving victims in legal limbo.