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Bitcoin bank closes after high-tech heist

Published on NewsOK Modified: March 4, 2014 at 7:20 pm •  Published: March 4, 2014
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SAN FRANCISCO (AP) — A bank specializing in bitcoins says it has closed after computer hackers robbed its digital currency.

The closure of the Flexcoin bank comes just a week after the collapse of Mt. Gox, a major bitcoin exchange.

Mt. Gox also linked its demise to an electronic heist.

The twin failures of Mt. Gox and Flexcoin will likely raise more doubts about bitcoin's ability to establish itself as an alternative currency.

Hackers stole 896 bitcoins from Flexcoin's online vault, or "hot wallet," according to a notice on Flexcoin's website Tuesday. That translates into a loss of about $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.

Bitcoins that Flexcoin kept offline, or in "cold storage," remain secure, according to the bank. Although Flexcoin didn't provide details, bitcoins stored this way are often documented on paper certificates or on a hard drive that's not connected to the Internet.

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