Fintech users' accounts are still too vulnerable to fraud and scams.​
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Crypto cash under attack

Protocol Fintech

Hello and welcome to Protocol | Fintech! This Friday: Coinbase and Cash App accounts are under siege, a Citi exec dishes out career advice and Robinhood plans to go public.

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The Big Story

Crypto cash under attack

Hackers targeted users of Coinbase and Square's Cash App, reportedly draining some accounts. "Within a couple of minutes, it was all taken away from me," a Coinbase customer (and one-time employee) told the New York Times. Some customers have complained that the companies aren't doing enough to protect them or to explain what happened.

Problematic apps. The incidents — which didn't appear to represent a breach of Coinbase or Square's systems — highlight how securing customer accounts has become more challenging as fintech expands, especially in the pandemic.

  • The crisis led to a big spike in downloads of mobile payment apps. But there also has been an increase in user reviews mentioning "fraud or scam."
  • It's not that surprising: Payment apps historically have seen higher fraud rates than traditional tools, such as credit and debit cards.
  • As Yahoo Finance noted, Cash App has generally dismal reviews on the Better Business Bureau site, which logged more than 2,500 complaints in the past 12 months.
  • Square says it takes fighting fraud seriously, and has been investing in new tools and adding staff to "prevent, detect and report bad activity," a spokesperson told Protocol.

Crypto is vulnerable. The Coinbase breach underscores security worries about Bitcoin and other crypto currencies.

  • Transactions can't be easily reversed. For defrauded customers, that's a bug, but for hackers, it's a feature.
  • Between 2011 and 2021, crypto users lost roughly $8 billion to criminal scams and security breaches.
  • Crypto exchanges' adherence to industry regulations — like KYC (know your customer) and AML (anti-money laundering) — is generally inadequate.
  • Coinbase is working to make its software tools more secure, Casper Sorensen, VP of Customer Operations, told Protocol.
  • The crypto marketplace, which recently filed to go public via a direct listing, is expanding its support staff and rolling out tools to make it easier for customers to troubleshoot issues.

A spotlight on security. Hacks and breaches in financial services have become a bigger worry overall.

  • The pandemic and the sharp shift to remote work led companies to roll out "new digital products and revenue streams," which created vulnerable areas in their network that "they are unprepared to protect," a new report said.

Fintech is here to stay. So are hackers. The incidents at Coinbase and Cash App make even clearer the risks fintechs and their customers must grapple with.

— Ben Pimentel



In an interview with Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., Lantzsch shares his take on edge computing: There are more innovations to come – and technology leaders should think equally about data and the algorithms as critical differentiators.

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From Protocol | Fintech

  • Emphasis on empathy. Jason Brown grew up poor. That inspired him to start Tally, a debt management startup that seeks to work with those struggling with financial stress, he told Ben.
  • Stock trading is everywhere. Startups are making it easier to embed investing features in banking and payments apps. The one-stop shopping could lure in new investors, but it also has dangers, Tomio reports.


  • "Bill payment may not strike you as the most obvious place to engage with customers; but when you consider that most lenders rarely see their customers after the initial loan application process, bill payment becomes the most reliable, long-term interaction you have." Steve Kramer, vice president of product at PayNearMe, on how bill payment technology can help in engaging with customers.
  • "While there is lots of fantastic talent working at incumbent banks, by collaborating with fintechs, they get the chance to work with a wider pool of talent simply by osmosis."John Cragg, CEO of MYHSM, in an essay on how fintechs and traditional banks can better work together.
  • "I am curious that fintechs make a big deal out of getting your pay two days early but no one is tackling the ACH problem."Peter Renton, LendIt founder, in a Twitter thread on faster money transfers.

3 Questions With...

Vanessa Colella, chief innovation officer, Citi

What fintech trend are you most excited about?

I'm probably most excited about the sort of emergence of the S in the middle of [environmental, social and corporate governance]. That's a little bit broader than fintech, but it ties to fintech really closely. The "S" has really become more important. Many of the societal issues that need to get solved have a massive financial component to it.

What fintech trend is most troubling for you?

The thing that really needs to keep all of us up at night is really around cyber. As more and more companies embed financial services into what the company does, that creates a lot of convenience for people and for businesses and that's great. But we live in a world where everything is connected, from your thermostat to your television to your watch to the computer you use to access your bank account. We need to make sure that we're helping all those companies that may come from a different orientation to keep building up and bolstering the safety and soundness of the industry.

What's been your biggest professional blunder and how did it help you?

I started my career in Teach for America. I was teaching Earth Science, which I had never taken before. But it was an eighth-grade class and I figured I could probably stay ahead by just reading 20 pages ahead in their textbook every night. One day in class, a kid who sat three rows back on the left hand side, asked me a question. I didn't know the answer but I answered anyway. [The student said,] "That's not what it says on page 232." And I immediately lost all credibility with this class and, when word got around, the other five classes that I was teaching each day. It took me weeks and weeks to build that back up. I was lucky enough early on in my career to learn that when you don't know something, the best answer is "I don't know but I'll get back to you."

Need to Know

  • Robinhood wants to go public. The stock-trading app said it has filed confidentially for an IPO.
  • Freetrade raised $69 million. The trading app's series B round was led by Left Lane Capital. Freetrade said it now has 600,000 users.
  • N26 named a new chief product officer.Gilles BianRosa, who previously served as SoundCloud's CPO, is joining the challenger bank.
  • Airwallex raised $100 million. The cross-border financial services company said the additional funding brings its series D total to $300 million and boosts its valuation to $2.6 billion.
  • Mastercard tied exec compensation to ESG goals.CEO Michael Miebach said a new company policy will affect executive vice presidents and above. Their pay will be linked to Mastercard's environmental, social and corporate governance initiatives.
  • AvidXchange is preparing to go public. The business payments company has reportedly hired Goldman Sachs as it gears up for an IPO at a $7 billion valuation.
  • The Fed chair's not crazy about crypto. Jay Powell drew a brighter line between crypto and digital dollars at a panel on virtual banking.
  • Greenwood raised $40 million.The digital bank geared to African American and Latino communities secured series A funding from major U.S. banks and financial institutions, including Bank of America, Truist, JPMorgan Chase, Wells Fargo, Mastercard and Visa.
  • Maxwell raised $16.3 million. The mortgage-digitization startup's series B round was led by Fin VC and TTV Capital.

Thanks for reading — see you Tuesday.

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