Another Bitcoin Site Bites the Dust

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Hong Kong's First Bitcoin Counter Opens To The Public
Lam Yik Fei/Getty Images
By Kiran Moodley

Just a week after one of bitcoin's major exchanges, Mt. Gox, went offline -- and then filed for bankruptcy on Friday -- a bitcoin bank was forced to close after hackers stole 896 bitcoins, worth over $600,000, in an attack Sunday.

The bitcoin bank Flexcoin posted a note on its site stating: "On March 2, 2014 Flexcoin was attacked and robbed of all coins in the hot wallet ... As Flexcoin does not have the resources, assets or otherwise to come back from this loss, we are closing our doors immediately."

The term "hot wallet" refers to bitcoins stored in an online wallet connected to the Internet.

Last week, Mt. Gox blamed hackers for stealing an estimated $480 million worth of bitcoins, due to what it called a weakness in its system. The company opted for "bankruptcy protection" in Japan on Friday.

Despite detailing outstanding debts of about 6.5 billion Japanese yen ($63.6 million), 850,000 lost bitcoins and 127,000 empty-handed customers, the exchange said it was looking to continue doing business.

While Reuters recently reported that a bitcoin user is suing Mt. Gox over its million-dollar losses,
Flexcoin emphasized that not all was lost for those users who had put their bitcoins into "cold storage," meaning coins held offline and not "within reach of the attacker."

"Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity. Once identified, cold storage coins will be transferred out free of charge," Flexcoin's note read.

"All other users will be directed to Flexcoin's 'Terms of service' located at "Flexcoin.com/118.html" a document which was agreed on, upon signing up with Flexcoin."

Flexcoin concluded the statement by confirming that it will be working with law enforcement to track the source of the hacking.

While Tuesday's news is yet another story about the troubles the virtual currency has with security, it has not affected bitcoin's price as it rallies after the Mt. Gox news last week. The currency climbed 17.99 percent Monday and was trading 5 percent higher Tuesday, with one bitcoin worth just under $700, according to Coindesk, which tracks the price of bitcoin.


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Rabbi Moishe

I've got a safe alternative to Bitcoins. They're called Buttcoins. Guess where you keep them?

March 05 2014 at 1:04 PM Report abuse rate up rate down Reply
Tom Wilson

You meant there is no BDIC…… Bitcoin Deposit Insurance Commission ? Well the Democrats need to fix that and bailout Mt. Gox, and Flexcoin. They are just TBTF !!

March 04 2014 at 2:47 PM Report abuse -1 rate up rate down Reply
k4jlp

Silly rabbit...bitcoins are for kids....the FEDS will make it so...Federal Reserve that is....

March 04 2014 at 12:22 PM Report abuse +1 rate up rate down Reply