Connect with us

Hi, what are you looking for?

SecurityWeekSecurityWeek

Application Security

Coinbase Pays $250K for ‘Market-Nuking’ Security Flaw

Cryptocurrency exchange Coinbase has shelled out its largest ever bug bounty payment — a quarter of a million dollars — for what was described as a “market-nuking” security flaw that could have allowed users to sell bitcoins they didn’t own.

Cryptocurrency exchange Coinbase has shelled out its largest ever bug bounty payment — a quarter of a million dollars — for what was described as a “market-nuking” security flaw that could have allowed users to sell bitcoins they didn’t own.

Coinbase confirmed the crisis-level security defect was reported by a third-party researcher on February 11 and triggered an emergency incident response that included placing the platform into “cancel-only mode,” a move that disabled all new trades.

The issue was privately reported to Coinbase via HackerOne but not before an anonymous Twitter account warned of the “market-nuking” consequences of the discovery.

A post-mortem note from Coinbase said the root cause of the vulnerability was a missing logic validation check in a Retail Brokerage API endpoint, which allowed a user to submit trades to a specific order book using a mismatched source account. 

[ READ: Treasury Sanctions Crypto Exchange in Anti-Ransomware Crackdown ]

Here’s an exclamation of the impact of the vulnerability:

  • A user has an account with 100 SHIB, and a second account with 0 BTC.
  • The user submits a market order to the BTC-USD order book to sell 100 BTC, but manually edits their API request to specify their SHIB account as the source of funds.
  • Here, the validation service would check to determine whether the source account had a sufficient balance to complete the trade, but not whether the source account matched the proposed asset for submitting the trade.
  • As a result, a market order to sell 100 BTC on the BTC-USD order book would be entered on the Coinbase Exchange.

“There were mitigating factors that would have limited the impact of this flaw had it been exploited at scale,” the company said, noting that the Coinbase Exchange has automatic price protection circuit breakers and a trade surveillance team that continuously monitors its markets for health and anomalous trading activity.

Coinbase said it corrected the flaw in less than six hours “without any impact to customer funds.”

“[We can] conclusively determine that it has never been maliciously exploited. We have also implemented additional checks to ensure that it cannot happen again,” Coinbase said, noting that it was serious enough to warrant its largest ever bug-bounty payout.

Advertisement. Scroll to continue reading.

Related: Robinhood Hacked, Millions of Names, Emails Stolen

Related: US Treasury Sanctions Crypto Exchange in Anti-Ransomware Crackdown

Related: Coinbase to Acquire Cryptography Firm Unbound Security

Written By

Ryan Naraine is Editor-at-Large at SecurityWeek and host of the popular Security Conversations podcast series. He is a security community engagement expert who has built programs at major global brands, including Intel Corp., Bishop Fox and GReAT. Ryan is a founding-director of the Security Tinkerers non-profit, an advisor to early-stage entrepreneurs, and a regular speaker at security conferences around the world.

Click to comment

Trending

Daily Briefing Newsletter

Subscribe to the SecurityWeek Email Briefing to stay informed on the latest threats, trends, and technology, along with insightful columns from industry experts.

Join the session as we discuss the challenges and best practices for cybersecurity leaders managing cloud identities.

Register

SecurityWeek’s Ransomware Resilience and Recovery Summit helps businesses to plan, prepare, and recover from a ransomware incident.

Register

Expert Insights

Related Content

Application Security

Cycode, a startup that provides solutions for protecting software source code, emerged from stealth mode on Tuesday with $4.6 million in seed funding.

Vulnerabilities

Less than a week after announcing that it would suspended service indefinitely due to a conflict with an (at the time) unnamed security researcher...

Cybercrime

The changing nature of what we still generally call ransomware will continue through 2023, driven by three primary conditions.

Data Protection

The cryptopocalypse is the point at which quantum computing becomes powerful enough to use Shor’s algorithm to crack PKI encryption.

Cybercrime

A recently disclosed vBulletin vulnerability, which had a zero-day status for roughly two days last week, was exploited in a hacker attack targeting the...

Identity & Access

Zero trust is not a replacement for identity and access management (IAM), but is the extension of IAM principles from people to everyone and...

Data Breaches

OpenAI has confirmed a ChatGPT data breach on the same day a security firm reported seeing the use of a component affected by an...