Flexcoin and Poloniex; Security Holes Exploited in Another Hack Attack

March 4, 2014

Flexcoin ‘the Bitcoin Bank’ Exchange shuts down after they lost 896 bitcoins from their hot wallet by hackers on Tuesday. After suffering such a huge loss, Flexcoin announced that they will be shutting their doors. All users who held accounts there are urged to contact them to extract bitcoins from their cold storage free of charge.

Users who put their coins into cold storage will be contacted by Flexcoin and asked to verify their identity. Once identified, cold storage coins will be transferred out free of charge. Cold storage coins were held offline and not within reach of the attacker. All other users will be directed to Flexcoin’s “Terms of service” located at “Flexcoin.com/118.html” a document which was agreed on, upon signing up with Flexcoin.

The coin-thief or thieves were traced to two wallets: 1NDkevapt4SWYFEmquCDBSf7DLMTNVggdu & 1QFcC5JitGwpFKqRDd9QNH3eGN56dCNgy6 and Flexcoin will continue to work with law enforcement to see what can be done. All bitcoins stolen were only off of their hot wallet and not of their cold storage. Unlike Mt. Gox, they hold reserves that can still be claimed by users.

For all Flexcoin customers, keep checking the Flexcoin Twitter for more updates.

Additionally, another exchange was attacked; Poloniex lost 12.3% of their holdings in another hacker was able to exploit a hole in their withdrawal process. Their system was able to recognize the threat and has since frozen all accounts until they can be certain about moving forward. Due to the inability to fulfill all possible withdrawals, they have cut 12.3% of all Bitcoin accounts until the shortcomings of their balances can be met by exchange fees and donations. Furthermore, they will refine their processing daemons to fix the exploited hole in the system.

It is unlikely to have a deep effect on the market as the recent Mt. Gox episode was largely shrugged off by the Bitcoin community and is seen as a sign to push for higher security and sophistication. 

After Mt. Gox fell, the price of Bitcoin recovered over $250: from a low of $425 last Tuesday to a high of $700 last night.

[divider]Remember to be smart[/divider]

After all these happenings and fallouts in the Bitcoin industry, CryptoCoinsNews would like to remind all crypto-currency users to be safe and be smart.

We suggest  to any third-party wallet users to contact your exchange and urge for greater transparency. Also, read our article reminding users to consider safer alternatives such as decentralized exchanges and hardware wallets.

For mac users, a new trojan called CoinThief may be disguising as popular apps.

Continue checking CryptoCoinsNews for further developments in security and safety issues.

Image courtesy of Bruce Turner.

Last modified (UTC): September 19, 2016 21:37