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Another bitcoin bank bites the dust, Flexcoin blames losses on hackers

Another bitcoin bank bites the dust, Flexcoin blames losses on hackers
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After the collapse of Mt. Gox, now Canada-based virtual currency exchange Flexcoin has been forced to close down.

Flexcoin said flaws in its software code enabled hackers to make off with bitcoins worth around 440,000 euros.

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

A message posted on its website explained that the attack had exploited a flaw in its code on transfers between users and involved inundating the system with simultaneous requests to move coins between accounts.

“Flexcoin has made every attempt to keep our servers as secure as possible, including regular testing,” it said, adding it had repelled thousands of attacks over the past few years. “But in the end, this was simply not enough.”

The firm said it is working with law enforcement agencies to trace the source of the hack.

Not all has been lost; it will return to owners bitcoins that were held in computers not connected to the internet and which could not be raided.

Mt. Gox, once the world’s dominant bitcoin exchange, also blamed hacking for its losses. It has filed for bankruptcy protection in Japan and said it may have lost some 850,000 bitcoins due to hacking.

One bitcoin was valued at about $658 (480 euros) on Wednesday, according to Bitstamp, one of the largest exchanges for trading bitcoins.

Japan looks at bitcoin regulation

Japan will this week set out rules on how to handle bitcoins. It is the first sign that the government is taking action on regulating the virtual currency after the collapse last week of Tokyo-based Mt. Gox.

The cabinet will decide on Friday how to treat bitcoins under existing laws, people familiar with the matter told Reuters.

The sources said banks and securities firms will not be able to handle bitcoin as part of their main business, suggesting the virtual currency will be treated more as a commodity, like gold.

Japan has struggled to define its approach to bitcoin since the collapse of Mt. Gox.

The authorities there are also looking at possibly taxing bitcoin transactions, but it remains unclear how they could do this, given that one of the attractions of using bitcoin is that transactions are largely anonymous.

‘Consumer protection legislations needed’

“We haven’t yet thoroughly grasped the situation, but some kind of regulation is needed from the perspective of consumer protection, and we will also discuss (bitcoin) from the perspective of imposing an asset tax,” said Takuya Hirai, head of an IT panel in the ruling Liberal Democratic Party.

The panel heard on Wednesday from consultant Deloitte about bitcoin and from officials of the Consumer Affairs Agency, the Financial Services Agency (FSA) the Finance Ministry, central bank, Cabinet Office and the National Police Agency about the Mt. Gox collapse, Hirai told reporters.

The FSA and the Finance Ministry have said bitcoin is not a currency and doesn’t fall under their purview, while the Bank of Japan has said it was studying the bitcoin phenomenon with interest.

Hiroshi Mikitani, a prominent Japanese e-commerce billionaire and CEO of Rakuten Inc, expressed caution about trying to regulate the virtual currency. “They should not act hastily,” he said, according to Kyodo News. “As for whether we need regulations, they should first examine the situation a bit more and discuss it in depth.”

with Reuters

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