Flexcoin, a relatively small Bitcoin bank, announced early Tuesday morning that it's shutting its doors in light of being completely robbed of its currency. All of it. Just days after a massive theft at another major Bitcoin depository, Flexcoin was completely cleaned out by hackers, leaving the site no choice but to shut down.
In a brief announcement on its website, Flexcoin execs announced:
On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet. The attacker made off with 896 BTC, dividing them into these two addresses:
As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.
According to Flexcoin's terms of service, Flexcoin users aren't owed anything: "We have taken every precaution to defend your bitcoins from hackers and/or intruders.," the terms clearly state. "However, Flexcoin Inc is not responsible for insuring any bitcoins stored in the Flexcoin system. You are entering into this agreement with Flexcoin Inc. You agree to not hold Flexcoin Inc, or Flexcoin Inc's stakeholders, or Flexcoin Inc's shareholders liable for any lost bitcoins." The total amount lost is 896 bitcoins, which converts to about $618,000.
Bitcoin users have responded similarly to how they responded to the Mt. Gox collapse — blame the individual site, not concept of Bitcoin itself. One reddit user writes Tuesday morning,
This is pretty sad. From a spectator's point of view though, how can this happen? What security measures did they have in place and how could they be breached?
This would all help answer the question 'who can we trust with our coins and why?' Of course, the answer is nobody 100 percent, but there must be some hosted wallets/exchanges that you can trust to a large degree, for say 98 percent of your coin.
The Mt. Gox collapse, which was much larger in scale, did not turn users away from the digital currency. Bitcoin investors are diehard believers in the idea of an unregulated, worldwide currency.
Sadly, it appears that Flexcoin did not see the theft coming at all — the company assured users after Mt. Gox that the same thing would not happen to them.
We hold zero coins in other companies, exchanges etc. While the MtGox closure is unfortunate, we at Flexcoin have not lost anything.— flexcoin (@flexcoin) February 25, 2014
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.