Anonymous DAI Holder Sues Coinbase Over $55M Frozen Funds

An anonymous crypto holder identified as ‘D.B.' filed a lawsuit on Monday against Coinbase and an individual identified as ‘John Doe,' alleging the exchange refused to return roughly $55 million in DAI that was frozen after a phishing theft on Aug. 20, 2024.

The complaint says D.B. lost access to his wallet after logging into a fraudulent webpage that allowed an attacker to drain his holdings. The filing alleges the attacker used a tool known as Inferno Drainer to move tokens and that some of the stolen funds later passed into a Coinbase retail account.

The complaint cites blockchain security firm Zero Shadow as tracing the funds to the Coinbase account. The filing is partially redacted and does not specify how much of the stolen DAI was held in that account.

According to the complaint, Coinbase froze the assets after D.B. notified the exchange but declined to return them without a court order to determine ownership. The suit asks a court to order Coinbase to return the ‘traceable' stolen funds and to grant D.B. immediate possession of those assets.

Attorneys for D.B. wrote in the filing that Coinbase acted reasonably in freezing the cryptocurrency but became unreasonable when it refused to release the funds after the plaintiff provided sworn proof of ownership. The complaint requests a judicial determination of ownership over the frozen assets.

Key portions of the filing are redacted, limiting public detail on how much of the stolen DAI was located on the Coinbase account and other specifics of the tracing. The lawsuit will require a court to decide whether Coinbase may withhold frozen assets without judicial adjudication after a claimant presents sworn proof of ownership.

Federal data show cryptocurrency fraud accounted for about $11.3 billion in reported losses last year, more than half of the $20.9 billion the FBI tracked in total internet crime losses. Phishing scams and automated tools such as drainers have been used in multiple high-value incidents on public blockchains; those attacks typically involve tricking users into signing transactions or revealing private keys, then moving tokens to addresses linked to exchanges or mixing services.

Tracing firms analyze on-chain movements to identify when stolen funds touch custodial platforms, which can enable exchanges to freeze funds, but legal proceedings often determine whether the assets are returned. The court filing indicates Coinbase did not release the frozen assets in response to D.B.'s claim and did not return them through the exchange's internal process.