Coinbase resolves UX error that triggered false security alerts

Coinbase crypto exchange has fixed a user interface error that incorrectly displayed failed password login attempts as “2-step verification failures” in Account Activity logs. The firm managed to fix the issue by updating its system to show “Password attempt failed” when needed.

BleepingComputers noted that several Coinbase users raised concerns that Coinbase was hacked, as their passwords were unique to the site, there was no sign of malware, and no other accounts were affected. The crypto exchange confirmed to the publication that the logging system was incorrectly attributing login attempts with incorrect passwords as “2FA failures,” even without attackers reaching the 2FA stage.

Coinbase fixes UX glitch that caused false security alarms for users

🔒 Confused Coinbase users thought they were hacked — but it was a logging bug.

Earlier this month, Coinbase users reported alarming "2FA failure" errors in their Account Activity logs, sparking fears of account compromises. Many reset passwords, scanned for malware, and assumed… pic.twitter.com/qxJ0wZyUYL

— EFANI Secure Cellphone Service (@efani) April 28, 2025

Crypto exchange Coinbase has fixed a UX error that labeled failed password login attempts as “2-step verification failed” in Account Activity logs. Lawrence Abrams, founder of cybersecurity-based publication BleepingComputer, who identified the error earlier this month, said the error caused users to believe attackers had successfully used their passwords and were only stopped at the 2FA verification step.

Abrams argued that the entries implied that a valid username and password were entered, but the login was blocked by 2-factor authentication, such as entering the wrong one-time passcode from an authenticator app.

The cybersecurity-focused publication revealed that Coinbase fixed the error by updating its system to show “Password attempt failed” when needed. Abrams also said that users reportedly spent hours checking their devices for malware and changing passwords because they perceived the notifications to mean that their accounts had been breached.

The founder of the cybersecurity-themed publication argued that those types of bugs are essential to fix as they cause unnecessary panic. He also noted that users contacted his firm saying they had reset all their passwords and spent hours trying to determine if their devices were compromised due to the error.

Abrams argued that such mislabeled entries could have also been used in social engineering attacks to convince users their account credentials were compromised, which may allow threat actors to gain sensitive information. The cybersecurity firm urged users to be wary of ongoing campaigns that use automated SMS phishing attacks and voice calls to impersonate Coinbase and attempt to steal 2FA credentials.

The crypto exchange mentioned previously that they will never call customers or send text messages requesting they change passwords or reset two-factor authentication (2FA). 2FA is a process that makes online accounts more secure by requiring at least two different ways to prove your identity before logging in.

Crypto UX challenges persist

On March 14, Coinbase also faced a phishing attack posing as a mandatory wallet migration, tricking users into setting up a new wallet with a pre-generated recovery phrase controlled by attackers. The crypto exchange revealed that the emails had a subject of “Migrate to Coinbase Wallet” and stated that all customers must transition to self-custodial wallets. 

Don Norman, founder of Nielsen Norman Group (NN/g), in 1998, while working at Apple, coined the term “user experience” to describe how a user can use apps “without fuss or bother.” The firm also published guidelines that suggested that error messages should use plain, understandable language.

Alona Dobshynska, senior product manager at Collabera, argued in research on how to improve user experience in crypto apps that the “cognitive complexity” of using crypto apps “represents a significant barrier” to crypto adoption. Dobshynska also noted in a 2021 paper that roughly 34.7% of digital asset users classify themselves as “rookies” and show less confidence in managing their virtual assets.

“Crypto-asset users differ in their security and risk perception.”

–Alona Dobshynska, Senior Product Manager at Collabera.

The researchers suggested that crypto users differed in security and risk perception because they come from different levels of familiarity with digital assets. The paper also argued that the users’ decisions and behavior affected how they practice their security.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More