FALSE ALERTS TO 125,000 COINBASE CUSTOMERS! WHAT YOU NEED TO KNOW?
Cryptocurrency exchange Coinbase sent an automated message to a large number of its customers on Friday, saying: "Your 2-step verification settings have been changed." Unfortunately, the message was sent in error—by Coinbase's count, 125,000 of those messages were sent (via email and SMS text) to customers whose 2FA settings had not changed. Are cryptocurrency platforms this unreliable?
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Today we are talking about the newest Coinbase debacle, where it has sent its users in a frenzy with false alerts.
According to Coinbase's own acknowledgment Saturday, its system began sending the erroneous messages at 1:45 pm Pacific time on Friday and kept sending them until the error was mitigated at 3:07 pm.
In that Twitter thread, Coinbase acknowledges the mistaken 2FA messages' potential for confusion—confusion which retiree Don Pirtle told CNBC led him to panic-sell more than $60,000 of cryptocurrency. Pirtle was holding this large wallet as an investment for his grandson, so the panicked sale may have been as much blessing as curse—he now questions whether cryptocurrency was a safe investment in the first place.
Coinbase says that the erroneous 2FA messages were the result of an internal error, not hacker activity. "All of a sudden, the system just started sending stuff like a bug in the system," Coinbase spokesperson Andrew Schmitt told CNBC, adding, "but it was not a malicious or third-party error."
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Most large financial institutions carry cyber fraud insurance policies and will cover hacked checking or savings accounts. "If you are victimized through cybertheft by no fault of your own, most large banks will make you whole," Bankrate.com CFA Greg McBride told USA Today.
The same is not true of Coinbase, which recently told one hacked customer that "there is no credible or supportable evidence that the compromise of your login credentials was the fault of Coinbase. As a result, Coinbase is unable to reimburse you for your alleged losses."
Don Pirtle, a 53-year-old retired police officer, was alarmed when he got the company’s email on Friday that his two-factor authentication had been changed, reported CNBC. He said he was afraid that a hacker was trying to take over his Coinbase account.
“I was scared to death. I contacted my daughter and her boyfriend. I asked them, ‘Should I sell my crypto?’” Pirtle added. “I thought, ‘I have to sell this before I lose the money.”’
That day, he said he sold $60,298 in crypto – an investment he was making for his grandson. He now questions whether it’s a safe investment. Coinbase is also under hot water for its poor customer Coinbase is handing out bitcoin worth $100 to customer service, leaving customers locked out of their accounts for several weeks. However, Coinbase is handing out bitcoin worth $100 to affected customers it revealed in its Reddit support group.
"To confirm, we are crediting a small number of users who were adversely affected by this incident with $100USD worth of BTC," Coinbase said in a post to its support page subreddit.
The company has not specified how many customers make up that "small number," and it did not respond to Insider's request for comment. The cost to Coinbase if all 125,000 received the handout would be $12.5 million.
This handout might save the trading platforms’ reputation from being dragged into the dirt by users, but its unlikely every customer is going to receive this generous charity.
Please bear in mind, we are not financial advisors and recommend that you do your own research prior to any investments.
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