Coinbase, the largest cryptocurrency exchange in the United States, admitted it falsely told around 125,000 customers that their security settings had changed.
The publicly traded company on Nasdaq told CNBC on Monday that it was due to an internal error.
Coinbase has “spent most of the weekend working with customers to make sure we can answer their questions,” company spokesman Andrew Schmitt told CNBC. “We believe the only way to build trust with our customers is to be transparent about when we make mistakes.”
The incident comes in the wake of a CNBC story a week ago in which detailed widespread complaints from Coinbase customers who had their accounts hacked and then couldn’t reach anyone in the company to help. Coinbase said at the time that it is improving its customer service by rolling out voice support this month for customers whose accounts have been taken over by a third party, and live chat later this year.
The company sent the security settings email to customers on Friday at 1:45 p.m. PT. It said, “Your two-step verification settings have been changed.” This created confusion and concern among investors who thought their account had been hacked.
Coinbase then sent a second email that the notification was “sent in error”. The company said in a tweet that it “had a notification delivery issue involving SMS text messages and email notifications notifying customers that their 2FA settings for the account were being changed “.
“Our team immediately started identifying the problem and stopping these erroneous notifications. We were able to stop these erroneous notifications at 3:07 p.m. PST. However, we know this has caused confusion for some, ”the tweet read.
The company said, “We will continue to work to win back the trust of each of our customers who have been affected by these notifications.”
The problem was due to an internal error and not a hack, said Schmitt, company spokesman. “All of a sudden the system just started sending things like a bug in the system, but it wasn’t a malicious bug or a third party bug.”
Don Pirtle, a 53-year-old retired police officer, told CNBC he was alarmed when he received the company’s email on Friday that his two-factor authentication had been changed. He said he was afraid that a hacker was trying to take over his Coinbase account.
“I was scared to death. I contacted my daughter and her boyfriend. I asked them, ‘Should I sell my crypto?'” Pirtle said. “I thought, ‘I have to sell this before I lose the money.’
That day he said he sold $ 60,298 in crypto – an investment he made for his grandson. He now wonders if it’s a safe investment.
Coinbase, which went public in April, has more than 68 million users, more than 2,100 full-time employees and $ 223 million in assets held, according to the company.