BlockTower Capital founder Ari Paul has publicly alleged that Coinbase lost $25 million belonging to his firm several years ago and subsequently covered up over $1 billion in crypto security breaches affecting at least a dozen other institutional clients.
BlockTower Founder Alleges $1 Billion In Covered-Up Losses
In a post published on September 29, Ari Paul—founder of BlockTower Capital and board member at Strobe VC—stated that his firm’s initial $25 million loss was framed as Coinbase misplacing the funds. However, Paul claims his subsequent investigation revealed a broader pattern of "massive and repeated hacks" that the cryptocurrency exchange allegedly concealed rather than remediated.
Paul noted that multiple legal processes remain active, limiting further public disclosure. In response to the post, Coinbase Support stated on X that it sent Paul a direct message to investigate the matter.
The allegations follow a separate September 26 post by an X user named Kuno, who accused Coinbase of stealing $1.2 million a year prior and threatened to release a recorded Google Meet call after opening more than 30 support tickets. Coinbase product head Jordan Fish (known online as Cobie) publicly responded that no account matching Kuno's description existed, suggesting the post may have functioned as engagement bait for a meme token.
Context of Security Breaches and Institutional Risks
While Paul's claims of a $1 billion cover-up remain unverified outside ongoing legal proceedings, Coinbase has faced documented security issues. In May 2025, the exchange disclosed a breach affecting at least 69,400 users after attackers bribed customer support personnel between December 2024 and May 2025. During that incident, Coinbase rejected a $20 million ransom demand before the attacker converted millions of stolen ETH into DAI while publicly taunting on-chain investigator ZachXBT.
Furthermore, ZachXBT accused Tiffany Milanovich in August of participating in $5 million in total thefts, which included a $500,000 drain from a single Coinbase account in October 2025. These security concerns arrive alongside broader security warnings across the industry, such as recent alerts on key theft risks targeting active cryptocurrency holders.
Key Takeaways
- BlockTower Capital founder Ari Paul alleges Coinbase lost $25 million of his firm's funds and covered up over $1 billion in total losses across 12+ firms.
- User Kuno alleged a $1.2 million loss from Coinbase, though product head Jordan Fish refuted the existence of the account.
- Coinbase previously disclosed a May 2025 breach impacting 69,400 users after declining a $20 million ransom demand.
Why It Matters
The serious accusations from an institutional investor like Ari Paul highlight persistent friction surrounding crypto exchange custody and transparency. If proven, allegations of undisclosed multi-million-dollar losses could trigger intense scrutiny from federal regulators already examining centralized exchange operations. For institutional funds and retail traders alike, the episode emphasizes the critical need for rigorous operational security and independent auditing of exchange custody systems.
