Canada Bitcoin bank Flexcoin shuts after hacker heist | Business| Economy and finance news from a German perspective | DW | 05.03.2014
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Canada Bitcoin bank Flexcoin shuts after hacker heist

Computer hackers have brought down another bank dealing with the so-called Bitcoin digital currency. Canadian Flexcoin bank has collapsed after a virtual bank heist, sharing the recent fate of Japan’s Mt Gox exchange.

Flexcoin had been forced to close down after losing Bitcoins worth about $600,000 (437,000 euros) in a hacker attack enabled by flaws in its software, the bank, which is based in Alberta, Canada, announced late on Tuesday.

All of the bank's 896 Bitcoins had been stolen on Sunday, Flexcoin said in a statement posted on its website, adding that it didn't have the resources and assets to come back from this loss.

The closure is the second setback for the Bitcoin community in just a few days following the bankruptcy of Tokyo-based Bitcoin exchange Mt Gox on Friday. Once the world's dominant Bitcoin exchange, Mt Gox filed for insolvency protection after losing an estimated 850,000 Bitcoins due to hacking. According to trading platform Bitstamp, a Bitcoin is currently valued at about $658.

On Tuesday, Flexcoin said it had made every attempt to keep its servers as secure as possible and had repelled thousands of attacks over the past few years.

“But in the end, this was simply not enough,” the bank added in its statement.

However, customers who were holding their Bitcoins in cold storage had not been affected by the hack and would be contacted by Flexcoin to verify their identities, the bank noted. Cold storage means coins are held offline and not within reach of the online attacker.

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The pitfalls of Bitcoin trading

Virtual currency Bitcoin has drawn growing attention from investors since trading began in 2009 in the wake of the financial crisis. So far the currency is unregulated by governments and central banks and functions on a peer-to-peer network. Bitcoin is viewed with skepticism for its potential to be misused for money laundering and buying illicit products.

As a result of the Mt Gox bankruptcy, the Japanese government on Wednesday announced it was planning to take action on regulating the virtual currency to protect consumers and impose taxes on trades.

uhe/dr (Reuters, dpa, AFP)

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