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A few thoughts. I agree with you, which is why we are currently going through a third party security audit in addition to the impromptu peer review by Andreas

by FredEE 13y ago

A few thoughts. I agree with you, which is why we are currently going through a third party security audit in addition to the impromptu peer review by Andreas the day MtGox went down and our normal reviews by accountants. We also hired a director of security from FB. Also, there were rate limits, just not well tuned enough. So it's definitely in focus for us. Hope this helps clarify (edited for formatting)

vinhboy 13y ago
Thanks for coming here and addressing the community. It's a thankless job. But thank you for doing it.
coinbase-craig 13y ago
Further, the security audit began this week before this issue. It was proactive, not responsive.
lvs 13y ago
Not to make anything awkward, but this is a far better reply than Brian's replies in this thread and on the blog.
dobbsbob 13y ago
What precautions have you taken against meatspace robbery? What's to stop 3 thugs with guns walking into your office(s) and cleaning out all the coins? Can you get insurance against this? Do you also have measures to prevent evil janitor attacks like hardware keyloggers being planted at 4:00am? Do you have screens facing an open window to watch from across the street? Can I rent beside your offices, drill holes through the walls and set up spycams or gain entry? Not to sound alarmist but seems no exchange has given a thought to physical security meanwhile bank execs are dropped off at work by private guards specializing in counter-kidnapping operations, even though their money is fully insured and extremely difficult to steal. Bitcoin's are easy to steal.
- mcherm 13y ago
  > meanwhile bank execs are dropped off at work by private guards specializing in counter-kidnapping operations Perhaps there are some bank executives for which this is true, but it is absolutely NOT the case for all banking executives. I work with some bank executives and they drive themselves to work in their own cars. The buildings DO have alarm systems and it is quite possible for the FBI to respond to physical threat incidents (because it is treated as a bank robbery) but otherwise there is little that is special in the way of physical security. And for Coinbase, I believe the lack of special physical guards is appropriate. A high percentage ("up to 97%" according to https://coinbase.com/security https://coinbase.com/security ) of their coins are in cold storage and while I am not privy to the details of Coinbase's arrangements, keysharing and multiple physical storage locations that are off-premises are a reasonable precaution. They are vulnerable to hostage-taking or "3 thugs with guns" to the exact same extent (no greater) as any other company with a similar amount of protection. I can't comment on protection against hardware keyloggers: it's a threat that they need to be prepared for. Cold storage is one major way of protecting against this threat, business insurance is another.
  - dobbsbob 13y ago
    Any other company doesn't need to worry since robbing their head office and demanding online bank transfers is a waste of time. A cryptocoin fixed rate exchange with millions in storage you can instantly transfer is a different story. It's like Ft. Knox being located in a regular office building with gold piled on the desks. Bank vaults have physical security so why don't Bitcoin based businesses. I did read through their security about the backups being spread around different locations, but those are backups. They would need access to the cold wallet on a regular basis if 97% of funds are truly in there. Unlikely to happen but then again police here didn't expect criminals would remove huge concrete barriers with a stolen tractor, ram a shopping mall entrance, drive through the mall and ram a gated jewelry store but they did.
    - mcherm 13y ago
      > They would need access to the cold wallet on a regular basis if 97% of funds are truly in there. Not true. First of all, that would only be true if their net daily turnover were more than 3% of their total amount stored -- which it may not be. Even then, I would expect graduated levels of cold wallets: imagine one with another 2% that is down the street in a bank safe deposit box, 5 wallets with 50% of the deposits stored in a way that can only be accessed with cooperation of 4 people in different parts of the country ... that sort of thing. I am, of course, just speculating: I don't know how Coinbase runs their system, I just know that they seem competent and that this is how I would run such a thing.
MBCook 13y ago
Why wasn't any of that information in the earlier statements? When given a list that contains demonstrable flaws "we see your list and don't think it's a problem (thus by implication are not doing anything about it)" does not induce confidence, it sounds like hubris. Simply writing that the rate limiting wasn't working correctly and you were fixing would have made all the difference in the world to me.
- korzun 13y ago
  Because then it will be bad PR. Now they can play it off so people who don't know any better won't move to another service.

by FredEE 13y ago

vinhboy 13y ago

Thanks for coming here and addressing the community. It's a thankless job. But thank you for doing it.

coinbase-craig 13y ago

Further, the security audit began this week before this issue. It was proactive, not responsive.

lvs 13y ago

Not to make anything awkward, but this is a far better reply than Brian's replies in this thread and on the blog.

dobbsbob 13y ago

What precautions have you taken against meatspace robbery? What's to stop 3 thugs with guns walking into your office(s) and cleaning out all the coins? Can you get insurance against this? Do you also have measures to prevent evil janitor attacks like hardware keyloggers being planted at 4:00am? Do you have screens facing an open window to watch from across the street? Can I rent beside your offices, drill holes through the walls and set up spycams or gain entry? Not to sound alarmist but seems no exchange has given a thought to physical security meanwhile bank execs are dropped off at work by private guards specializing in counter-kidnapping operations, even though their money is fully insured and extremely difficult to steal. Bitcoin's are easy to steal.

mcherm 13y ago
> meanwhile bank execs are dropped off at work by private guards specializing in counter-kidnapping operations Perhaps there are some bank executives for which this is true, but it is absolutely NOT the case for all banking executives. I work with some bank executives and they drive themselves to work in their own cars. The buildings DO have alarm systems and it is quite possible for the FBI to respond to physical threat incidents (because it is treated as a bank robbery) but otherwise there is little that is special in the way of physical security. And for Coinbase, I believe the lack of special physical guards is appropriate. A high percentage ("up to 97%" according to https://coinbase.com/security https://coinbase.com/security ) of their coins are in cold storage and while I am not privy to the details of Coinbase's arrangements, keysharing and multiple physical storage locations that are off-premises are a reasonable precaution. They are vulnerable to hostage-taking or "3 thugs with guns" to the exact same extent (no greater) as any other company with a similar amount of protection. I can't comment on protection against hardware keyloggers: it's a threat that they need to be prepared for. Cold storage is one major way of protecting against this threat, business insurance is another.
- dobbsbob 13y ago
  Any other company doesn't need to worry since robbing their head office and demanding online bank transfers is a waste of time. A cryptocoin fixed rate exchange with millions in storage you can instantly transfer is a different story. It's like Ft. Knox being located in a regular office building with gold piled on the desks. Bank vaults have physical security so why don't Bitcoin based businesses. I did read through their security about the backups being spread around different locations, but those are backups. They would need access to the cold wallet on a regular basis if 97% of funds are truly in there. Unlikely to happen but then again police here didn't expect criminals would remove huge concrete barriers with a stolen tractor, ram a shopping mall entrance, drive through the mall and ram a gated jewelry store but they did.
  - mcherm 13y ago
    > They would need access to the cold wallet on a regular basis if 97% of funds are truly in there. Not true. First of all, that would only be true if their net daily turnover were more than 3% of their total amount stored -- which it may not be. Even then, I would expect graduated levels of cold wallets: imagine one with another 2% that is down the street in a bank safe deposit box, 5 wallets with 50% of the deposits stored in a way that can only be accessed with cooperation of 4 people in different parts of the country ... that sort of thing. I am, of course, just speculating: I don't know how Coinbase runs their system, I just know that they seem competent and that this is how I would run such a thing.

MBCook 13y ago

Why wasn't any of that information in the earlier statements? When given a list that contains demonstrable flaws "we see your list and don't think it's a problem (thus by implication are not doing anything about it)" does not induce confidence, it sounds like hubris. Simply writing that the rate limiting wasn't working correctly and you were fixing would have made all the difference in the world to me.

korzun 13y ago
Because then it will be bad PR. Now they can play it off so people who don't know any better won't move to another service.