The Cryptocurrency exchange Coinbase says more than 6000 customers have lost their assets. In a letter sent to the California Attorney General, they stated that the hackers took advantage of a flaw in the SMS account recovery process. They were able to receive an SMS two-factor authentication token allowing them to gain access to the funds. Then, they quickly sent the funds into their own secure wallet.
As it seems, the hackers were targeting these customers beforehand. They had prepared e-mail accounts, phone numbers and passwords associated with the victim accounts. However, Coinbase strongly rejects the possibility of their private information stolen from their servers.
“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.”
These attacks apparently carried out between March and May of 2021.
Coinbase claims that they have updated the account recovery protocol to prevent further attacks. The follow up process to find the bad actors is now officially active in cooperation with the law enforcement.
Coinbase is Important
It is worth knowing that Coinbase is the primary cryptocurrency exchange of the United States. The US customers certainly have fewer choices for crypto exchanges due to tight regulations regarding these platforms.
Following regulatory crackdowns on Binance in the US, cryptocurrency exchanges are being closely watched by the US Treasury and SEC.
A reoccurring pattern of similar series of attacks can be disastrous for Coinbase and other crypto exchanges active in the US. Furthermore, we stand in a crucial time in history where skepticism toward crypto is strong. Any negligence toward customer service and security can be detrimental to the whole market at this point..
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