Bitcoin bank goes bust after hack attack

Posted: March 5, 2014

The bitcoin bank Flexcoin, which offered a peer-funded currency exchange service, has been forced to close due to the theft by hackers on Sunday of currency worth £365,000.

The company website was closed on Tuesday morning, with a statement admitting that the bank does not have resources to cover the loss:

“On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet,” the statement read. “As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.”

While the company followed best practices guidelines by storing a portion of the currency on devices not connected to the internet, only users who explicitly requested that their bitcoins be held in this way (and paid the 0.5% fee) will now be able to retrieve their funds.

“Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity,” the statement continued. “Once identified, cold storage coins will be transferred out free of charge. Cold storage coins were held offline and not within reach of the attacker. Flexcoin will attempt to work with law enforcement to trace the source of the hack.”

The new digital-currency, which has soared to popularity in recent years largely through gaming and adult communities, was recently declared a legitimate monetary instrument in a U.S. Senate meeting. Bitcoin is relatively untraceable, offering a high level of anonymity to users, which makes it an attractive payment option for adult website users. Porn.com is the largest adult site to embrace Bitcoin to date.

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