FINTECH FRAUD MUSEUM
Real fraud cases that impacted legitimate fintech companies
Square Fraud Scheme
A single seller defrauded Square's payment system, costing the company $5.7 million. The incident highlighted vulnerabilities in merchant oversight.
Company Impact:
Forced Square to implement stricter merchant verification and monitoring systems
Binance Regulatory Scrutiny
Regulatory bodies and lawmakers raised concerns in 2023 regarding Binance's compliance with KYC/AML regulations and overall platform integrity amid reports of sanctions evasion and enabling illicit finance.
Company Impact:
Increased regulatory pressure, investigations, and calls for greater transparency and user protection measures from Binance.
Robinhood Data Breach
In November 2021, Robinhood suffered a data breach where hackers accessed personal information of approximately 7 million users via social engineering of an employee and demanded ransom.
Company Impact:
Robinhood rejected the ransom, notified law enforcement, and reviewed its security measures. Exposed user data included email addresses and names.
Coinbase SIM Swap Attacks
Between March and May 2021, at least 6,000 Coinbase customers had funds stolen after attackers exploited a flaw in Coinbase's SMS-based account recovery process, often preceded by phishing for credentials.
Company Impact:
Coinbase reimbursed affected users and highlighted the risks of SMS-based 2FA, encouraging stronger authentication methods.
PayPal Phishing Campaign
Throughout 2021, PayPal users were targets of sophisticated phishing campaigns using fake emails and websites to steal login credentials and compromise accounts.
Company Impact:
Reinforced the need for user vigilance and for PayPal to continue enhancing email authentication and user education on phishing tactics.
Apple Pay Launch Fraud
High fraud rates (up to 6% at some institutions) at Apple Pay's launch due to weak identity verification by banks when adding stolen cards to the new service.
Company Impact:
Prompted banks to strengthen identity verification processes for card provisioning in Apple Pay.
All cases are documented with legitimate news sources and official reports.
These real incidents show how fraud directly impacts fintech companies and their responses.