95% of Coinbase Users Rely on SMS-Based 2FA, Account Takeover Stats Reveal

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In a revealing disclosure, cryptocurrency exchange Coinbase has shared alarming statistics about account security—highlighting that 95% of its users rely on SMS-based two-factor authentication (2FA), the weakest form of login protection available. More concerning? This same group accounted for 95.65% of all account takeovers as of November 2022.

These findings underscore a growing vulnerability in digital asset security and emphasize the urgent need for users to upgrade their authentication methods. While two-factor authentication is a critical layer of defense, not all 2FA types offer equal protection.

Why SMS-Based 2FA Is Risky

Coinbase mandates two-factor authentication for all accounts, requiring users to provide both a password and a one-time code to log in. However, by default, this second factor is delivered via SMS—a method increasingly exploited by cybercriminals.

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SMS-based 2FA sends the one-time passcode through cellular networks, creating a dependency on mobile carriers. This opens the door to SIM-swapping attacks, where hackers trick providers into transferring a victim’s phone number to a new SIM card under their control. Once successful, attackers receive all incoming texts—including 2FA codes—effectively bypassing security.

Such attacks have led to devastating losses:

The FBI has reported a sharp rise in SIM-swapping incidents, often involving social engineering or insider collusion with telecom employees.

Stronger Alternatives: Authenticator Apps & Security Keys

While SMS-based 2FA is better than no second factor, it pales in comparison to more robust options:

According to Coinbase’s data:

Even these low numbers suggest that attackers are evolving—using malware, phishing, or physical theft to compromise devices. But the trend is clear: stronger 2FA drastically reduces risk.

The Security Gap: Popularity vs. Protection

Despite the risks, SMS remains the dominant 2FA method due to its simplicity and accessibility. Most users find it easy to receive a text rather than install an app or buy a hardware key.

However, Coinbase notes a significant shift among high-value users:

“Just over 5% of our user base has chosen push, time-based one-time passwords, and physical security keys—but those users represent over 57% of the assets under custody.”

This means that while most users stick with vulnerable SMS authentication, the majority of cryptocurrency value is protected by advanced security measures.

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How to Upgrade Your 2FA on Coinbase

Upgrading your authentication method is simple and highly recommended:

  1. Log into your Coinbase account.
  2. Navigate to Settings > Security Settings.

  3. Under "Two-Factor Authentication," disable SMS and enable one of the following:

    • Authenticator App (TOTP)
    • Security Key (FIDO2/U2F)
    • Coinbase App Push Notifications

Once enabled, you’ll significantly reduce your exposure to SIM-swapping and remote hacking attempts.

It’s worth noting that while Coinbase hasn’t announced plans to retire SMS-based 2FA, industry trends suggest eventual phase-outs. Twitter, for example, already discontinued SMS-based verification for most accounts due to security concerns.

Frequently Asked Questions (FAQ)

Why is SMS-based 2FA considered weak?

SMS relies on cellular networks, which are vulnerable to SIM-swapping attacks. Hackers can redirect your texts by transferring your number to another device, gaining access to 2FA codes without ever stealing your phone.

Are authenticator apps safer than SMS?

Yes. Authenticator apps generate codes locally on your device using encrypted algorithms. They don’t depend on network signals or carrier infrastructure, making them far more resistant to interception.

Can account takeovers still happen with security keys?

While rare, yes—especially if attackers gain physical access to your key or install malware on your device. However, security keys remain the most secure consumer-grade option available today.

What should I do if I’ve been targeted by a SIM-swap attack?

Immediately contact your mobile provider to reclaim your number and freeze your accounts. Then reach out to Coinbase support to secure your wallet. Consider enabling a security key moving forward.

Does Coinbase recommend any specific authenticator app?

Coinbase doesn’t endorse specific third-party apps but supports any TOTP-compatible authenticator like Google Authenticator, Authy, or Microsoft Authenticator.

Is push notification login safe?

Yes—when used through the official Coinbase app. Push notifications are encrypted and require direct approval from your registered device, offering strong protection without the risks of SMS.

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Final Thoughts: Security Shouldn’t Be Optional

The message from Coinbase’s data is clear: relying on SMS-based 2FA leaves you exposed. With nearly all compromised accounts belonging to users who used text-based verification, the incentive to upgrade is stronger than ever.

Cyber threats are evolving rapidly, and protecting digital assets requires proactive steps beyond basic passwords and text messages. Whether you’re managing a small portfolio or holding significant value in crypto, adopting stronger authentication methods isn’t just smart—it’s essential.

As the industry moves toward more secure standards, users must stay ahead of the curve. Your private keys—and your financial future—depend on it.

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