The self-proclaimed world’s first bitcoin bank has been robbed of over $600,000.
When Mt Gox went nuclear Flexcoin, the self-proclaimed world’s first Bitcoin bank, seemed fine. It even went so far as to Tweet that “while the Mt. Gox closure is unfortunate, we at Flexcoin have not lost anything.” Perhaps it ought to have added “at least, not yet,” since thanks to a massive robbery Flexcoin is no more. Its hot wallets have been cleaned out, and 896 Bitcoin stolen, valued at about $620,000. Flexcoin cannot afford the loss, and is shutting down effective immediately.
“Flexcoin has made every attempt to keep our servers as secure as possible, including regular testing. In our ~3 years of existence we have successfully repelled thousands of attacks. But in the end, this was simply not enough,” said Flexcoin in a statement published via its website. “Having this be the demise of our small company, after the endless hours of work we’ve put in, was never our intent. We’ve failed our customers, our business, and ultimately the Bitcoin community.”
Flexcoin has promised to restore any Bitcoin kept in its cold wallet, stored in computers that weren’t connected to the internet. However everything in its hot wallet was vulnerable to what Flexcoin describes as “a flaw in the code” that allows transfer between Flexcoin customers. That flaw allowed someone to shove everything in the hot wallet into a couple of temporary web addresses, and then vanish.
Flexcoin isn’t the only one to have suffered losses. Poloniex, a Bitcoin exchange, admits that approximately 12.3% of its Bitcoin reserves have been stolen by a hacker exploiting its withdrawals code. “The hacker discovered that if you place several withdrawals all in practically the same instant, they will get processed at more or less the same time,” says a Poloniex representative. “This will result in a negative balance, but valid insertions into the database, which then get picked up by the withdrawal daemon.”
Poloniex is solving its problem by deducting 12.3% from its remaining customers’ balances. Poloniex’s owner has promised to donate some of his own money and refuses to take any profit until the debt is paid.