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$620,000 theft kills another Bitcoin exchange, but Bitcoin prices still rise

Image used with permission by copyright holder

Cyber-thieves have delivered a fatal blow to the second Bitcoin exchange in a week – but that hasn’t stopped the value of the embattled cryptocurrency from rising.

Flexcoin, a lesser-known exchange, announced on its website Tuesday that it is shutting down after the theft of 896 Bitcoins, which are worth approximately $625,000 at current exchange rates. The company also revealed the two Bitcoin wallet addresses where thieves transferred the stolen funds.

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

The stolen Bitcoins were stored in Flexcoin’s so-called “hot wallet” – a digital wallet connected to the Internet. Users who stored their funds in Flexcoin’s cold storage, where “coins were held offline and not within reach of the attacker,” may contact the exchange to withdraw their Bitcoins. Flexcoin says these customers must verify their identities before funds will be transferred.

Twisting the knife, Flexcoin says all other customers (i.e. those who lost their Bitcoin to the hot wallet heist) will be redirected to the company’s “Terms of Service,” which Flexcoin points out is “a document which was agreed on, upon signing up with Flexcoin.” Flexcoin’s terms explicitly state that “Flexcoin Inc is not responsible for insuring any bitcoins stored in the Flexcoin system.” It adds that customers “agree to not hold Flexcoin Inc, or Flexcoin Inc’s stakeholders, or Flexcoin Inc’s shareholders liable for any lost Bitcoins.”

The shuttering of Flexcoin follows the high-profile collapse of Mt. Gox, once the world’s largest Bitcoin exchange, which claims to have lost some 850,000 Bitcoins (around $460 million), and 2.8 billion yen ($27.6 million) to theft. Unlike Flexcoin, Mt. Gox claims thieves were able to access Bitcoin stored in both its hot and cold wallets – a detail that has become a source of intense debate and contention in the Bitcoin community.

While many commentators and analysts believed the apparent death of Mt. Gox, which last week filed for bankruptcy protection in its home country of Japan, would shake investor confidence in Bitcoin, the price of the cryptocurrency has jumped nearly 30 percent, from a low of less than $500 to about $700 as of this writing.

Andrew Couts
Former Digital Trends Contributor
Features Editor for Digital Trends, Andrew Couts covers a wide swath of consumer technology topics, with particular focus on…
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