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Bitcoin Exchange Flexcoin Wiped Out By Theft

Posted by timothy on from the in-the-movie-version-it'll-be-the-feds dept.

mrspoonsi writes "Joining MtGox, Flexcoin today announced they have had their vault wiped out, to the tune of some 896 BTC (about $615,000) by hackers. '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: 1NDkevapt4SWYFEmquCDBSf7DLMTNVggdu [and] 1QFcC5JitGwpFKqRDd9QNH3eGN56dCNgy6. As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.'"

4 of 704 comments (clear)

  1. From the FAQ by blueg3 · · Score: 5, Informative

    Q: Where will my bitcoins go?

    A: Bitcoins deposited with flexcoin will be stored on our secure servers. They will remain in your account, and your account only, unless you authorize a transaction with them.

    Wishful thinking.

    From the Terms of Service:

    We have taken every precaution to defend your bitcoins from hackers and/or intruders. 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.

    We'll see.

  2. Flexcoin was not an "Exchange" by SpankiMonki · · Score: 5, Informative

    Although Flexcoin labelled themselves as a "bank" what they really were was an EWallet service. Why people still use these web-based services to store their BTC balances is beyond comprehension.

  3. Re:Unregulated currency by Stormy+Dragon · · Score: 5, Informative

    which means its easy for people to just steal your money and lie about it

    Yes, because never in history has anyone been "mugged" or "conned" or otherwise had their government regulated currency stolen by a third party.

  4. Re:Unregulated currency by Anonymous Coward · · Score: 5, Informative

    The problems have been in trusting your stash with companies that have no business being trusted.

    Bitcoin may not have any problems with the protocol - which is debatable - but the problem lies in the requirement for exchanges.

    In order to be able to change Bitcoin into dollars and back to Bitcoins, the exchanges must, out of necessity, maintain a stock of Bitcoins that is server-accessible.

    If it's server-accessible, it's hackable and subject to theft. If you think you can make something hack-proof purely out of software, let me introduce you to Kurl Godel.

    Also, from what I've read it appears that Bitcoin thefts are not reversible. This is especially problematic given that there is a finite supply of Bitcoins; no central authority can come in and save your Bitcoin "bank" if it is robbed, whereas if my local Wells Fargo down the street is robbed, the FDIC insures my deposits to the tune of $250,000 (which also comes in handy in case the bank fails entirely, which is an extremely rare occurrence.) Even if there was the equivalent of an FDIC for Bitcoin "banks", eventually they run out of Bitcoins they can pay back on insurance.

    This, and myriad other problems with Bitcoint that have been enumerated on Slashdot ad nauseum, should really convince any rational-minded person that Bitcoin is entirely worthless.