Canadian police investigating after bitcoin bank Flexcoin folds

Wed Mar 5, 2014 8:52pm EST
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By Julie Gordon and Leah Schnurr

VANCOUVER/TORONTO (Reuters) - Canadian police have launched an investigation after online bitcoin bank Flexcoin, which closed its virtual doors this week, said that it had lost about $600,000 worth of the digital currency in a hacker attack.

The Edmonton, Alberta-based company reported the theft of 896 bitcoins on its website on Monday and said it "does not have the resources (or) assets ... to come back from this loss." It blamed the attack on hackers who had targeted its online wallet.

Bitcoins stored in Flexcoin's cold storage facility, which is basically an offline bank, were not affected by the hack and will be returned to customers, the company said.

The Edmonton Police Service (EPS) said on Wednesday they were investigating the issue.

"I can confirm that detectives from the EPS Economic Crimes Section and Technological Crimes Unit are following up with Flexcoin, and the matter is currently under investigation," said police spokesman Chad Orydzuk.

Flexcoin's demise comes close on the heels of the collapse of Mt. Gox, once the world's dominant bitcoin exchange, which filed for bankruptcy last week after it said it had lost some 850,000 bitcoins.

Bitcoin is a digital currency that is bought and sold on a peer-to-peer network, independent of any central bank or government. Its value soared last year, and the total worth of bitcoins minted is now about $7 billion.

Flexcoin had earlier on Wednesday complained that local authorities were not taking the theft seriously, Tweeting: "My attempts to file a police report were laughed at, I was advised #bitcoin is a scam." But it later Tweeted that it had been in touch with police and would provide more information on Thursday.   Continued...

Signs on window advertise a bitcoin ATM machine that has been installed in a Waves Coffee House in Vancouver, British Columbia October 28, 2013. REUTERS/Andy Clark