Recent revelations showed that a flaw in the setup of Coinbase’s SMS-based multi-factor authentication allowed attackers to compromise and steal from 6,000 customers.
While pretending to be Coinbase, the attackers used phishing messages to tell users that they had to pass a security test because someone might have had access to their account, prompting Coinbase to suspend it.
A Coinbase fake phishing page then appeared, asking users to log in with their login credentials.
Once they have gained access to the victim’s inbox and Coinbase account, the attackers use the information at their disposal to impersonate the user, obtain an SMS-based two-factor authentication code, and access the person’s account after which they transfer money to such an account.
Although Coinbase uses multi-factor authentication, which requires setting up a special method of two-factor authentication such as SMS, an authentication app, or a physical security key, SMS-based authentication is considered to be the least secure and also the easiest to compromise method. Coinbase, therefore, advises choosing other methods to improve security.
The company stated, “Many people choose to use SMS 2FA because it’s linked to a phone number, rather than to one particular device and is generally the easiest to set up and to use. Unfortunately, that same level of convenience also makes it easier for persistent attackers to intercept your 2FA codes. We strongly encourage everyone that currently uses SMS as a secondary authentication method to upgrade to stronger methods like Google Authenticator or a security key everywhere it is supported.”