Crypto exchange Coinbase has sued an alleged cybersquatter over the domain coinbase.de, which it says has been used to redirect users to an app used to trade physical coins and to potentially extort the exchange into buying it.
Coinbase sued Tobias Honscha from Isernhagen, Germany, in a California federal court on Thursday, claiming he is squatting on the domain coinbase.de to use for different purposes, including redirecting visitors to his app for trading physical coins and making money as a Coinbase affiliate.
“Coinbase recently became aware that Honscha is using and trafficking in the domain coinbase.de in bad faith to capitalize on the goodwill that Coinbase has developed in the Coinbase name over the past decade and more,” the exchange said in a lawsuit.
Cybersquatting, or domain squatting, involves buying a web domain name similar to an existing well-known brand. Phishing scammers often use the practice to trick unwitting users, while some domain owners will try to sell the domain to the trademark holder for a profit.
URL broke Coinbase affiliate agreement, exchange claims
Coinbase claimed Honscha had, at one time, used the domain name to host his affiliate link to the crypto exchange, fetching rewards for those who sign up through it.
The company said this violated its affiliate agreement, which says an affiliate link can’t “masquerade as being the same as Coinbase” or use the words “Coinbase or Coin Base” in domain names.
“Honscha violated the terms of the Affiliate Agreement by using the coinbase.de domain, which fully incorporates the COINBASE trademark and gives the impression that Honscha is one in the same with Coinbase,” the complaint read.
Coinbase claims pressure to buy domain at “inflated price”
The exchange accused Honscha of attempting “to profit from the domain by threatening potential fraud or cybercrimes unless Coinbase pays an inflated price.”
Coinbase claimed that in conversations with Honscha, he noted the “‘risks of a phishing attack via the Coinbase email account’” along with “‘unsolicited submission of ID documents, passwords, and one-time 2FA codes’ if Coinbase were to not purchase the domain from Honscha.”
“This is a clear attempt to hold Coinbase hostage by threatening to offload it to a buyer who would weaponize it even more,” the company said.
Coinbase says domain used for other means, including email
Coinbase claimed that after it told Honscha to stop using the domain to host his affiliate link, the site was then used to redirect visitors to a mobile app for trading physical coins.
The company also accused Honscha of “operating an email service through the @coinbase.de email account,” which would allow him to communicate with and get sensitive information from “individuals who may mistakenly believe they are communicating with Coinbase.”
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“These mistaken emails have and will continue to occur,” Coinbase wrote in the complaint. “The public may very well expect that a company’s corporate or product website can be found at a domain name that consists of or includes that company’s name or trademark or variations thereof.”
At the time of writing, the domain redirected to a forum for discussing physical coins, which listed Honscha as a “responsible person” for the site. An email listed on the site did not immediately return a request for comment.
Coinbase has asked the court to grant it damages and profits from Honscha’s alleged misuse of the domain, to stop him from using it, and to possibly transfer the domain to Coinbase.
The company is also seeking damages over Honscha’s alleged breach of the affiliate contract, including commissions he might have received through the domain.
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