Ben Chan, Mason Borda and Barath Chandrashekar, software engineers at BitGo, have released EtherLi, a multisig, two-factor authentication wallet for storing and transmitting ether. The SMS 2-FA is part of the BitGo network and is the precursor to an Industry grade Wallet with more features and supported platforms.
When you create a wallet, they deploy a multi-signature contract to the blockchain. The official Ethereum reference code is used for this contract. The wallet is created with 3 accounts or keys, 2 of which are required to successfully send funds.
The web client acts as a single account running and signing logic locally. The second account which is required to apply the second signature is run by our service and acts as a co-signer that will confirm transactions given the users authorization. In the case of an emergency, the owner of the wallet still has two of the three keys necessary for recovery of funds.