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Coinbase hack sees thousands of users' accounts drained

Cryptocurrencies
(Image credit: Lordowski / Shutterstock)

Coinbase has sent out breach notification letters to over 6000 users admitting they might have lost funds in a months-long campaign against the cryptocurrency exchange.

In the letter, the company said attackers took advantage of a flaw in Coinbase’ two-factor authentication (2FA) mechanism to carry out several assaults between March and May 20, 2021.

“As soon as Coinbase learned of this issue, we updated our SMS Account Recovery protocols to prevent any further bypassing of that authentication process,” notes Coinbase in the notification letter.

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Even as the exchange is investigating the incident, it has decided to reimburse all customers by depositing funds equal to the cryptos stolen from their accounts.

Complex campaign

Sharing more details, Coinbase said that attackers would have required certain information associated with the customers account, such as their phone numbers, and login credentials.

The issue has been brewing for some time now. Unconfirmed reports of hackers accessing and draining the cryptocurrency wallets of Coinbase customers first surfaced in August. Then in September, the company had to reassure its users that the email they received about the change in their 2FA settings were sent erroneously.

While the exchange has admitted that it is “not able to determine conclusively how these third parties gained access to this information,” if it were to guess it’d say the details were inadvertently leaked by the customers as part of an elaborative and affective phishing campaign.

“Even with the information described above, additional authentication is required in order to access your Coinbase account. However, in this incident, for customers who use SMS texts for two-factor authentication, the third party took advantage of a flaw in Coinbase’s SMS Account Recovery process in order to receive an SMS two-factor authentication token and gain access to your account,” explained Coinbase.

In addition to reimbursing the funds, Coinbase will provide free credit monitoring service to customers, as it suggests users to use a different 2FA mechanism besides SMS-based one, and cycle the password of their Coinbase account, as well as of the associated email address.

Mayank Sharma

With almost two decades of writing and reporting on Linux, Mayank Sharma would like everyone to think he’s TechRadar Pro’s expert on the topic. Of course, he’s just as interested in other computing topics, particularly cybersecurity, cloud, containers, and coding.