Bitcoin Bank Flexcoin to Close After $600k Bitcoin Theft

Flexcoin has revealed 890 BTC were stolen as part of a breach of its hot wallet storage.

AccessTimeIconMar 4, 2014 at 4:07 p.m. UTC
Updated Sep 14, 2021 at 2:08 p.m. UTC
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Alberta-based bitcoin storage specialist Flexcoin has announced that it will shut down following an attack and subsequent robbery that saw cybercriminals abscond with 896 BTC (roughly $600,000 at press time) stored in the company's hot wallets.

Flexcoin, which styled itself as the "first bitcoin bank", though it was not legally such an entity, took to its homepage to announce the theft and closure.

The statement reads:

"As Flexcoin does not have the resources, assets or otherwise to come back from this loss, we are closing our doors immediately."

Flexcoin also provided the wallet addresses of the alleged hackers. The largest wallet of which received 592.1 BTC from the breach, while the smaller of the two held at one point 304 BTC supposedly taken from the website.

The entirety of the two accounts have since been withdrawn in other transactions. Neither wallet seems to have any recorded transactions prior to 2nd March.

— flexcoin (@flexcoin) March 4, 2014

Remaining funds

Following the announcement of the closure, customers who held bitcoins in Flexcoin's cold storage accounts were assured that they would be able to retrieve the funds. Individuals who contact Flexcoin will be asked to provide identification, and will have their coins transferred from the bank free of charge.

The company had last week posted a tweet regarding the safety of their bitcoin storage practices.

— flexcoin (@flexcoin) February 25, 2014

Notably, the wording provided indicated that the attack differed from the Mt. Gox assault, which alleged its cold storage was "wiped out due to a leak in the hot wallet”.

About Flexcoin

Flexcoin aimed to differentiate itself from other electronic wallet providers by incentivizing users for keeping their bitcoin balances on the site.

The company monetized by charging employees 0.02 BTC or 1% of transaction amounts for funds transferred out of cold storage, and 0.01 BTC or one half of 1% for funds transferred to cold storage.

Flexcoin to bitcoin transactions were also subject to charges.

The announcement confirms fears that many in the bitcoin community have long harbored toward Flexcoin and other bitcoin wallet storage services.

As early as two years ago, Flexcoin was singled out as a service that many argued would not be able to protect consumer investments due to limitations in its design.

Digital theft image via Shutterstock


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