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
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

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The entirety of the two accounts have since been withdrawn in other transactions.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

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.