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“Bank” that claimed to solve Bitcoin’s security problem robbed, shuts down

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posted on Mar, 4 2014 @ 10:47 AM
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Flexcoin, which proclaimed itself to be the "world's first bitcoin bank" and the solver of "nearly every problem that exists with the Bitcoin currency today," says it has shut down after a robbery. An attacker made off with 896 bitcoins, the equivalent of about $620,000 at today's exchange rates.

A statement on Flexcoin's website read as follows:

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

1QFcC5JitGwpFKqRDd9QNH3eGN56dCNgy6

As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.

The "hot wallet" is what exchanges use to pay out withdrawals instantly. Bitcoins deposited by users are put into "cold storage." Flexcoin said it will help these users get their coins back. "Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity," the bank said. "Once identified, cold storage coins will be transferred out free of charge. Cold storage coins were held offline and not within reach of the attacker."

Flexcoin said it "will attempt to work with law enforcement to trace the source of the hack."

The company made money on transfer fees. To entice users, Flexcoin offered monthly bitcoin payments to any account holder with a positive balance at the end of each month. However, the company did offer one stark warning, in bold text:

Legal Notice: We are not a true bank that accepts USD or any national currency, only bitcoins which by their nature are not regulated, we’re not FDIC insured or regulated by any government entity.

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Looks like they solved all the problems but one. Growing pains.




posted on Mar, 4 2014 @ 11:25 AM
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reply to post by roadgravel
 


Bitcoin is selling for about 700 a coin right now...200 up from just before mt gox shut down....its a game...and a fun one at that...you can make alot of money on it.



posted on Mar, 4 2014 @ 11:31 AM
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reply to post by cosmicexplorer
 


Yep, where there is risk there is always potential for massive gains. You just have to make sure you don't place all your eggs in one basket.


I often wonder though, are things like this "robbery" a hit on cryptocurrency in general?



posted on Mar, 4 2014 @ 11:37 AM
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Auricom
reply to post by cosmicexplorer
 


Yep, where there is risk there is always potential for massive gains. You just have to make sure you don't place all your eggs in one basket.


I often wonder though, are things like this "robbery" a hit on cryptocurrency in general?


See since nothing is regulated I have this sick feeling sometimes some of these "robberies" are just the companies themselves stealing and hiding it as "hacked". I have no evidence of this but sometimes it makes me wonder.



posted on Mar, 4 2014 @ 12:37 PM
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cosmicexplorer
reply to post by roadgravel
 


Bitcoin is selling for about 700 a coin right now...200 up from just before mt gox shut down....its a game...and a fun one at that...you can make alot of money on it.


True. One can also lose a lot of money.

At this point, only two words come to mind:

Holland. Tulips.

I really hope that we can get a digital currency like Bitcoin to thrive. The current fiat currency system is a total sham and was developed to benefit the few at the expense of everyone else.

I think it's possible. But I am an optimist.

Hope springs eternal...



posted on Mar, 4 2014 @ 12:45 PM
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Dogecoin is going to replace the bitcoin. You should get a few while it is still a penny to buy. It has a lot of followers and if this cryptocurrency goes anywhere, I would place a bet on it. Oh and bet is cheap at the moment.



posted on Mar, 4 2014 @ 12:54 PM
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cosmicexplorer

Auricom
reply to post by cosmicexplorer
 


Yep, where there is risk there is always potential for massive gains. You just have to make sure you don't place all your eggs in one basket.


I often wonder though, are things like this "robbery" a hit on cryptocurrency in general?


See since nothing is regulated I have this sick feeling sometimes some of these "robberies" are just the companies themselves stealing and hiding it as "hacked". I have no evidence of this but sometimes it makes me wonder.


gee, really?...you mean you don't trust an internet currency, which is completely untraceable, of unknown origination, ran by unknown people, from unknown locations, subject to no regulations?....



posted on Mar, 4 2014 @ 02:38 PM
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reply to post by jimmyx
 


well there are several companies that are trying to work with the feds...and make clients register to use their exchange...you register your bank and info with them as if you were opening a bank account. So some are legit..or trying to be.



posted on Mar, 4 2014 @ 06:08 PM
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cosmicexplorer
reply to post by jimmyx
 


well there are several companies that are trying to work with the feds...and make clients register to use their exchange...you register your bank and info with them as if you were opening a bank account. So some are legit..or trying to be.


The problem is not with the clients! Clients are the victims.

And yes, I do wonder how many of the "hacks" were inside jobs. Imagine you were a security guard (or CEO!) for an unregulated bank's gold horde. And the gold weighted 1 ounce and can fit in your pocket. And there are no cameras. And the vault is in a glass box near the highway.

But heck, you can feel satisfied it's not that evil fiat currency. (Sorry, this is no longer science & technology posting)

From a technological point of view the only way out is to avoid single points of failure, so that the "contents of an account", such as a a bank's reserve, can be reconstructed from publicly available data, and not 'stolen', the identity of the owner verified. So that the protocol has to agree in the open about not just transfers but entire deposits and holdings.

The problem isn't crypto-currency---it's crypto-banking.

Of course this goes against the instincts of the hyperlibertarians who like the idea of being "untracable", and being able to purchase anything. Now they see why this didn't work in the real world and why the pesky government regulations started in the first place: crime.


edit on 4-3-2014 by mbkennel because: (no reason given)

edit on 4-3-2014 by mbkennel because: (no reason given)

edit on 4-3-2014 by mbkennel because: (no reason given)



posted on Mar, 4 2014 @ 06:47 PM
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I think something along the lines of the Open Transaction system will end up as the bank. It seems promising.



posted on Mar, 4 2014 @ 06:53 PM
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i believe one of two things happened here a this company stole the bitcoins or a group of real banjs hired hackers to steal it to show this currency as a failure



posted on Mar, 4 2014 @ 07:20 PM
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reply to post by mbkennel
 


I guess mean the anon clients...no one knows who is who...if they link their bank they cant really get away with it



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