After exploiting a vulnerability in Coinbase's SMS multi-factor authentication security mechanism, a threat actor stole cryptocurrency from 6,000 customers, according to the firm. A threat actor executed a hacking campaign between March and May 20th, 2021 to penetrate Coinbase customer accounts and steal cryptocurrency, according to a warning given to impacted consumers this week.
The hackers apparently required to know the user's email address, password, and phone number, as well as have access to their email accounts, according to the US-based exchange, which has roughly 68 million customers from over 100 countries. It's unclear how the hackers got their hands on that information.
"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," Coinbase told customers in electronic notifications.
Customers' personal information was exposed as well, according to the report, "including their complete name, email address, home address, date of birth, IP addresses for account activity, transaction history, account holdings, and balances."
According to Coinbase, a flaw in their SMS account recovery process allowed hackers to acquire access to the SMS two-factor authentication token required to access a secured account. Coinbase claims to have updated the "SMS Account Recovery protocols" after learning of the incident, preventing any further bypassing of SMS multi-factor authentication.
Because the Coinbase bug allowed threat actors to gain access to accounts that were thought to be secure, the exchange is depositing funds in affected accounts equal to the stolen amount.
"We will be depositing funds into your account equal to the value of the currency improperly removed from your account at the time of the incident. Some customers have already been reimbursed -- we will ensure all customers affected receive the full value of what you lost," promised Coinbase. It's unclear whether Coinbase will credit hacked users with the stolen cryptocurrency or fiat currency. If fiat currency is used, it may result in a taxable event for the victims if their profits increase.
Coinbase recommends implementing multi-factor authentication (MFA) with security keys, Time-based One-Time Passwords (TOTP) with an authenticator app, or SMS text messages as a last resort in their account security guide.
