$100 000 USD

MAY 2019




"Coinbase is a secure platform that makes it easy to buy, sell, and store cryptocurrency like Bitcoin, Ethereum, and more." "As the leading mainstream cryptocurrency exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. Coinbase offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors, and its own U.S. dollar stable-coin."


"Coinbase was founded in 2012 and is a fully regulated and licensed cryptocurrency exchange supporting all U.S. states except Hawaii. Coinbase initially only allowed for Bitcoin trading but quickly began adding cryptocurrencies that fit its decentralized criteria."


"Its list expanded to include Ethereum, Litecoin, Bitcoin Cash, XRP, and many others with the promise of more as long as its requirements are met."


"The ability to port your SIM card to another device is a service that mobile carriers provide to their customers. It allows a customer to request their phone number be transferred to a new device. In most cases, this is a perfectly legitimate request; this happens when we upgrade to a new phone, switch mobile carriers, etc."


"A “SIM port attack”, however, is a malicious port performed by an unauthorized source — the attacker. The attacker ports your SIM card to a phone that they control. The attacker then initiates the password reset flow on your email account. A verification code is sent from your email provider to your phone number — which is intercepted by the attacker, as they now control your SIM card. The diagram below outlines the attack step by step."


"On Monday (May 20), Sean Coonce, an engineering manager at crypto custodian BitGo, revealed that last week he became the victim of a SIM swap attack (he referred to this as a “SIM port hack”) as the result of which his Coinbase account got “drained” and he lost “north of $100,000.”" "According to the post, Coonce had over $100,000 siphoned out of his account on cryptocurrency exchange Coinbase in under 24 hours. Coone details SIM swapping, a practice that sees the attacker maliciously requesting a telecommunications carrier to redirect the traffic of a mobile phone number to a device over which they have control."


"[B]y this time the attacker had completed Coinbase’s password reset process with the 24-hour delay period having elapsed. Besides draining everything that was contained in his Coinbase wallet, the attacker also bought cryptocurrencies using Coonce’s funds deposited on the exchange. The attacker then moved the bitcoin and other cryptocurrencies to a non-Coinbase on-chain address."


"SMS as a 2FA method [was] the most common mechanism deployed by crypto users. However, this [didn't turn] out well for the industry. There have been several reports of theft of millions of dollars using the SIM swapping method."

CoinBase and other platforms commonly use SMS-based authentication to allow account recovery, as do email providers.


This resulted in a single point of failure, where an attacker can impersonate the customer to the phone provider, and request the phone service to be switched over to a device they control.


From that point forward, they can reset the email password, and any passwords to exchange accounts, withdrawing funds from platforms.


It's recommended that platforms use factors that involve physical hardware, and more factors are always better to authenticate users.


Another strategy is to prevent withdrawals from accounts within a longer time period whenever a password is changed or there's a login from a suspicious location.


All of these methods can effectively reduce the ability to perform these types of attacks. The responsibility and incentive are shared between platform and user to prevent these situations.


Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

Get Social

  • email
  • reddit
  • telegram
  • Twitter

© 2021 Quadriga Initiative. Your use of this site/service accepts the Terms of Use and Privacy Policy. This site is not associated with Ernst & Young, Miller Thompson, or the Official Committee of Affected Users. Hosted in Canada by HosterBox.