Coinbase Wallet sparks backlash with new encrypted messaging feature

Non-custodial crypto wallet Coinbase Wallet is about to launch a new feature that some crypto security experts warn could become a new tool for scammers to target users.

Coinbase Wallet, the cryptocurrency wallet developed by the Coinbase exchange, appears to be aiming for super app status with a new feature — though some security experts warn it could do more harm than good.

In an X announcement on Tuesday, the Coinbase Wallet team said users will soon be able to use “encrypted messaging” powered by XMTP, an open protocol for instant communication.

The update will apply to both direct messages and group chats. The team also said users will be able to access mini apps “directly in the chat,” signaling a push into the same territory as Telegram, which had introduced mini apps but later limited their development to those building on the TON network.

While some users were excited about the update, security experts weren’t as thrilled. MetaMask‘s head of security Taylor Monahan called out Coinbase in a post on X, saying the company “has failed to understand, detect, or stop” scammers who’ve been taking over user accounts on Coinbase “for over a year.”

“Coinbase instead decided to build a feature that gives scammers a direct, encrypted line to all their wallet users,” Monahan added.

Monahan’s remarks echo longstanding criticism from anonymous blockchain investigator ZachXBT, who has repeatedly flagged Coinbase’s weak protections against social engineering scams. In a recent Telegram post, ZachXBT noted that “no other major exchange has the same problem,” adding in another X post that they “cannot recommend Coinbase as an exchange to anyone.”

As of press time, Coinbase hasn’t issued any public response to the accusations.