A São Paulo court ordered Coinbase to return nearly $100K to a user whose funds vanished from a self-custody wallet. The exchange could not prove the customer authorized the transaction, and the ruling may set a precedent that holds wallet providers liable for security.
A São Paulo State Court ordered Coinbase to return nearly $100K to a user who deposited the funds into a Coinbase wallet, then watched them disappear through unauthorized transactions. The court leaned on Brazil’s Customer Protection Code, which puts the burden of proof on the business providing the service.
Coinbase argued it played no part because the wallet’s private key sat under the user’s full control. But the court found Coinbase unable to show that the wallet holder initiated the transaction, or that any security measures existed to prevent the loss.
Why the ruling shifts liability
The decision may set a precedent across the self-custody wallet industry, where providers now face a duty to build software resilient enough to withstand these attacks. Raphael Souza, a cryptocurrency attorney, said the ruling dismantles two common arguments used by crypto companies.
The first is that a self-custody wallet generates no liability. Souza countered that anyone who develops and markets a product is responsible for its security, a standard that applies to Coinbase because it is a registered company in Brazil.
The evidence Coinbase never provided
The second argument Souza rejected is that technical documents settle these cases on their own, without a company explaining them so a court can follow. Magistrate Ju Hyeon Lee criticized Coinbase for offering no such explanation.
Because the user’s stated amount went uncontested, the court ordered Coinbase to return the full sum plus the due legal interest. The outcome pushes the question of who answers for a hacked wallet toward the firms that build them.
Source: Bitcoin.com News
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