Coinbase Offers Affected Users $100 in BTC Following 2FA Errors

September 02, 2021, 10:15 AM AEST - 3 weeks ago

The NASDAQ-traded cryptocurrency exchange Coinbase says it will disburse individual compensation payments of US$100 in bitcoin to some of its customers who were affected by the recent erroneous 2FA notifications: “We recognise that issues like this can hurt [users’] trust, the exchange said in a post on Reddit.

Coinbase Erroneously Sent 2FA Message to 125,000 Users

Two-factor authentication (2FA) serves as an extra layer of security for users’ digital assets on the platform. It’s a security system that requires two separate authentications in order to gain access to something – in this case, cryptocurrency.

On August 27, Coinbase erroneously passed a message to about 125,000 customers, informing them that their 2FA settings had been changed. Due to the false alarm, some of the affected users began panicking that their accounts had been compromised.

Shortly after the notification, however, the Coinbase team recognised and halted the issue. Given this can impact users’ trust, the exchange opted to send US$100 in bitcoin as compensation to some of the affected users. 

We are crediting a small number of users who were adversely affected by this incident with $100USD worth of BTC.

Coinbase, Reddit post

It remains unknown how many users will receive the free money. It would cost Coinbase about US$12.5 million to compensate all 125,000 affected users. 

A Timely Reminder to Hold Your Own Keys

The Coinbase incident comes as a timely reminder as to why people should HODL their own cryptocurrencies rather than entrusting them to third-party companies. It is possible for an exchange’s security or data to be breached, which leaves users at the risk of losing their coins either through hacks or phishing, as seen with Coinbase early in July

HODLing with hardware wallets keeps your digital assets off the internet, thus safeguarding them from cyber attacks.

This incident was the last thing Coinbase needed. As reported by Crypto News Australia in late July, the exchange is already staring down the barrel of a class-action lawsuit in relation to its NASDAQ listing.

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