A Kraken and Coinbase user reportedly lost $6.7 million in crypto after a suspected physical attack, while stolen funds moved through Tornado Cash.
A cryptocurrency user reportedly lost nearly $6.7 million after a suspected physical attack. According to on-chain investigator Specter, the attackers withdrew money from accounts associated with Kraken and Coinbase. Moreover, the stolen assets included Ethereum, Bitcoin, and cbBTC. The incident quickly became a talking point in the crypto community.
Large Crypto Transfers Raise Fresh Security Fears
The attackers pulled out 1,554 ETH from the victim’s Kraken account, said Specter. During the transfers, the stolen Ethereum was valued at almost $3.3 million. Additionally, 10.5 BTC were stolen from the same address.
A Kraken and Coinbase user lost $6.7M, likely as a result of a physical attack.
A total of 1,554 $ETH (~$3.3M) and 10.5 bitcoin:native were withdrawn from the victim’s Kraken account, while 34.1 $cbBTC (~$2.6M) was withdrawn from Coinbase.
The attackers have already laundered… pic.twitter.com/Y9CvvWY0EQ
— Specter (@SpecterAnalyst) May 20, 2026
At the same time, it was reported that another withdrawal took place from Coinbase. The hackers also stole 34.1 cbBTC from the victim’s Coinbase account, according to Specter. The value of the cbBTC holdings was nearly $2.6 million. This resulted in losses of nearly $6.7 million being reported.
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In addition, Specter thinks the theft was probably a physical attack on the account holder. But the authorities have not made the incident public. However, significant transfers from the victim’s wallets were recorded in blockchain transactions soon after the reported attack.
The report also alleged that the attackers transferred stolen money via Tornado Cash. This crypto mixing platform is designed to assist users in concealing blockchain transaction trails. Specter says that almost $5.3 million has already been deposited into Tornado Cash since the incident.
Tornado Cash has been criticized for years because criminals frequently use it for money laundering. As a result, blockchain investigators are keeping an eye on transfers that are linked to the service.
Physical Threats Against Crypto Holders Continue Rising
The number of physical attacks on crypto investors has increased throughout the digital asset space. Crypto wallets differ from conventional banks in that they can offer direct access to huge sums of money. So, criminals will sometimes go after investors themselves, rather than just using online hacking techniques.
Over the last few years, there have been several cases of people having their wallets stolen, their cryptos being taken, and their wallets being transferred to other people. Some victims were allegedly threatened until they unlocked phones or approved transactions. With the prices of cryptocurrencies still climbing, criminals are now more interested in targeting high-value digital asset holders.
Kraken and Coinbase have not made any official statement regarding the incident. Both exchanges, however, routinely ask users to turn on additional security measures. These measures include two-factor authentication, withdrawal limits, and account alerts.
Blockchain investigators continue to trace wallet transactions linked to the stolen funds. Blockchain transactions are public, meaning investigators can trace transactions between wallets and exchanges.
The attack also underscores the increasing security worries in the crypto sector throughout 2026. While blockchain technology provides transparency, criminals are still finding ways to target investors. Hence, many crypto users are now more interested in digital security and personal safety protections.
