Bitcoin Bank Flexcoin Shuts Down After $620,000 Heist

Bitcoin Bank Flexcoin Shuts Down After $US620,000 Heist

Flexcoin, famous for making bitcoin banking as easy as regular banking, is no more. The company shut its doors on Tuesday morning after hackers stole 896 bitcoins (nearly $US620,000) from its vault on Sunday. And the most unsettling thing? That wasn't even the only bitcoin heist last weekend.

To Flexcoin's credit, it wasn't completely cleaned out by hackers. Hackers did clean out Flexcoin's hot wallet, but an undisclosed number of bitcoins in cold storage were untouched. "Cold storage" simply means that the bitcoins were kept in computers not connected to the internet, an extra level of security for which customers pay an extra 0.5 per cent. Flexcoin will give those bitcoins back to customers. Those whose bitcoins were stolen are, well, they're shit out of luck because bitcoins aren't insured like good ol' greenbacks are in most banks.

If this sounds like a familiar story, that's because it is. On Tuesday, another bitcoin firm called Polonix also admitted that hackers broke in and stole 12.5 per cent of its reserves, though it plans on replenishing the lost 'coin itself. And who could forget the infamous implosion of Mt.Gox, the Japan-based bitcoin exchange that filed for bankruptcy last week and announced that $US424 million worth of cryptocurrency was lost and gone forever. Those just a couple of the major heists and boondoggles on a growing list of heists and boondoggles .

But what do you expect. The burgeoning bitcoin industry is famously unstable and vulnerable. Sure, it's an exciting idea for the sake of liberty and anarchy and whatever! It's just not the safest way to store your money right now, is all. [The Guardian via Angel Jimenez]

Picture: Flickr


Comments

    Well I wonder if the 0.1% who actually own most of the bitcoins have enough money to carry out these hacks and thefts? Wouldnt surprise me. Bitcoin = crimcoin.

    This is why there are laws surrounding financial institutions. While they still go bankrupt etc. it is much less likely to happen and at least people go to jail when things go wrong.

    Sometimes you have to wonder if some of these bitcoin banks are scams, and say they were hacked when they just siphoned the coins themselves.

    I notice in other news they have the wallet addresses of the hackers. According to bitcoin lovers there is also traceability in the public block chain record. Well there may be so now that you have the wallet addresses you can trace the bitcoins right?
    Wrong. There is no ID required to open a bitcoin wallet and the wallet can be moved here there and anywhere. So all traceability ends with the moving sands of obscuria in the wallet address. Never mind but they havent got a hope in hell of tracing the missing bitcoins.
    This is why this "currency" is favoured by criminals and its main use has been in assisting criminal activities, money laundering and avoiding tax. This is also why Rupert Murdochs media outlets take every opportunity it can to hail it as an innovation (bitcoin atm coming to a town near you soon!!). Absolutely disgraceful but then that media empire has a history of disgraceful behaviour. Fewer than 1000 people own the vast majority of all bitcoins but the rest of us have to tolerate the crime wave it has unleashed.

      So it's like stealing cash from a sleeping family?

    bitcoin is failing. It always sounded good in theory, but now its all falling apart.

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