September 26, 2021

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Coinbase caused panic in its customer base with a false security warning

Coinbase caused panic in its customer base with a false security warning

125,000 Coinbase customers were incorrectly warned that their security settings had changed. Some have reacted radically.

“Scared to Death” sold for tens of thousands of dollars

Coinbase, the US cryptocurrency wallet, has incorrectly warned about 125,000 users that their two-factor authentication settings have changed. It caused panic in some cases, and in at least one case, a user sold tens of thousands of dollars in crypto out of fear of account security.

internal error

Coinbase confirmed to the FSA that the error was internal and not caused by hackers.

Profit increased by 4900 percent

Coinbase is the largest US cryptocurrency exchange and the company was listed on the exchange in April. The company reported a 4900 percent increase in profits over the previous year, thus clearly benefiting from the turbulent events surrounding the cryptocurrency.

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Historic concern about piracy

The astonishing historical hack of cryptocurrency wallets also features Coinbase and its clients, for example Mount Gox. This helps explain the sometimes backlash to false warnings about account security: One affected customer said he was “scared to death” and sold crypto savings that were to go to his grandson, for more than $60,000 USD.

“Your hack is your problem”

While traditional financial institutions largely offset losses from hacking, this is not the case with Coinbase. The company has a strict policy that “your hack is your problem”. In addition, it seems that the support is not what it should be. While tweeting as Coinbase admits to the false warnings, there are a lot of complaints that the accounts have been banned for several weeks. Coinbase confirmed that those affected by the suspension will soon receive help by phone, and later in the year support via live chat.

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