06.12.2021

Crypto exchange users will receive compensation for erroneous notifications

Users of the largest American cryptocurrency exchange Coinbase experienced a massive panic attack this weekend. It happened due to the fact that the platform mistakenly sent out emails about changing the parameters of two-factor authentication of accounts (2FA).

As a result, more than 125 thousand traders and investors received notifications, which in this situation were perceived as unauthorized access to an account with a cryptocurrency in it. That is, in fact, it spoke of a possible entry into the account by a hacker. Naturally, this letter scared traders and investors. Let’s talk about the situation in more detail.

Recall that 2FA is a method for identifying a user in a service that uses two different types of authentication data. 2FA is an additional layer of account protection in case fraudsters suddenly manage to get a password from it in some way.

That is, in fact, we are talking about codes that are generated in an application like Google Authenticator. They are valid for only a few seconds, so you won’t be able to pick or guess them. They must be entered after specifying the login and password on cryptocurrency exchanges.

Note that 2FA codes are also required to withdraw funds. This means that even if the attackers somehow go through the authorization procedure, they will face another problem during the withdrawal. In this regard, we strongly recommend enabling two-factor authentication – and it is advisable to do this before entering large amounts on exchanges.

It is also ideal to have a special device for generating these codes that does not leave the house. Still, an ordinary smartphone that is constantly with you can be lost.

Problems of cryptocurrency exchanges

After the situation, the exchange’s official Twitter account posted an apology in this regard. Here is a quote from company representatives, in which they voiced their own position. The replica is provided by Cointelegraph .

We are focused on building trust and security in the crypto community so that the open financial system that we all want becomes a reality. We understand that issues like these can undermine that trust.

Accordingly, the management of the exchange perceived the situation as a serious risk to its own reputation. Still, such notifications could cause investors to take unplanned actions with their coins. For example, withdraw them to third-party wallets, which somehow make them more vulnerable – especially if a person has not done anything like this before.

Messages were sent on August 29 from 00:45 to 2:07 Moscow time. Despite the Coinbase announcement, many recipients of the emails have taken additional steps to protect their funds. They began to change secret 2FA combinations and passwords, as well as withdraw funds to eliminate the potential for hacking.

It appears that the problem was caused by a technical glitch within the exchange itself, as many traders were still unable to access the Coinbase mobile app for a while after the incident. Representatives of the trading platform assure that the exchange will do everything possible to correct and combat similar cases in the future.

Coinbase didn’t do without a simple apology: all users affected by the bug will receive a $ 100 compensation to their accounts. Although the very fact of fake emails is a rather unpleasant incident, compensation will smooth out the negative impression of the exchange.

We believe that the situation is unlikely to seriously affect the attitude of exchange users to its management or employees. Still, ideally, traders should not have lost funds, in addition, nothing would have happened to their money even if they were inactive. This means that what happened can be attributed to the human factor, which also happen on other platforms.

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