Second Bitcoin bank folds after hackers steal virtual cash from online vault
Digital currency comes under increasing pressure as second bank says it has closed following the theft of its bitcoin reserves
A Canada-based bank specialising in bitcoins says it has closed after computer hackers stole its digital currency.
The closure of the Flexcoin bank comes just a week after the collapse of Mt Gox, a major bitcoin exchange. Tokyo-based Mt Gox also linked its demise to an electronic heist.
The twin failures of Mt Gox and Flexcoin will probably raise more doubts about bitcoin’s ability to establish itself as an alternative currency.
In a notice on Tuesday, Flexcoin says 896 bitcoins were stolen from its online vault. That translates into a loss of about US$600,000, based on bitcoin’s current trading value.
Unlike banks dealing in government-backed currencies, Flexcoin’s losses aren’t covered by deposit insurance. The Alberta, Canada, bank says it can’t recover from the setback.
Flexcoin says bitcoins stored offline remain secure.
Mt Gox, which at one time reportedly processed 80 per cent of global bitcoin transactions, sought bankruptcy protection from the Tokyo District Court earlier this month and admitted that it had lost half a billion US dollars worth of the digital currency.