The World’s first Bitcoin bank has closed after a hacker discovered a weakness in the company’s code and made off with $600,000 in bitcoins.
FlexCoin, a bitcoin storage service that boldly claimed to “solve nearly every problem that exists with the Bitcoin currency today”, has shut down after losing 896 bitcoins from its front-end. Yesterday, the company explained that the problem resulted in a design flaw in the site’s hot wallet:
The attacker then successfully exploited a flaw in the code which allows transfers between flexcoin users. By sending thousands of simultaneous requests, the attacker was able to “move” coins from one user account to another until the sending account was overdrawn, before balances were updated.
According to a report by PC World there is some uncertainty as to whether all users will be refunded as the site’s terms of services states that the company âis not responsible for insuring any bitcoins stored in the Flexcoin system.â And the company’s updated website message states:
As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.
This news is being widely circulated among major news outlets this morning at a time when the mainstream media apparently has an appetite for negative bitcoin news. A lot of the reporting tends to place the blame on Bitcoin when in reality these problems are caused by shoddy operations and negligent management.
The market price is down 4.5% with bitcoins trading at $662.00 at last check, according to Coinmarketcap.com.
Listen to a special audio version of this story here: http://youtu.be/Ltu_-6bOUoc
