Earlier quoted context omitted.
> Compare that to a U2F token where you can very reasonably remove the password entirely and still be just as safe Yeah, and it requires me to use a U2F token, which I can loose, etc. You have to balance security and usability, and SMS as a second factor seems like a perfectly reasonable balance.
Its generally not "second factor authentication" but 2-factor authentication. The idea is that you have 2 separate authentication factors. Preferably both with decent security. Besides, I don't believe coinbase does SMS only account recovery. So here SMS really did fail as a second factor. Since it seems attackers must have had a password and SMS. (I am not 100% on the coinbase account recovery process)
So the hacker only needed to hijack his SMS.... with that, they gained access to his email, and then with that gained access to coinbase. No password required.