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Flexcoin is shutting down
- oddshocks 13y agoTheir ironic last tweet before shutting down: https://twitter.com/flexcoin/status/438355933777756160 https://twitter.com/flexcoin/status/438355933777756160
- rglover 13y agoIf they really were hacked, this was the catalyst for it happening. PSA: Don't peacock.
- phaed 13y agoYep, this was pretty much a dare to hackers everywhere.
- smtddr 13y agoThat's harsh. =/ Another bit of irony... http://i.imgur.com/KurgdXp.png http://i.imgur.com/KurgdXp.png But seriously, sorry to those who lost coins here. Also sorry to the folks of flexcoin, the timing couldn't be worse. Can't say it enough; cold-wallets and private key that's exclusively in your possession. Only you can prevent forest f- er...bitcoin thefts.
- uptown 13y agoNice of them to link to their terms of service. The relevant section being: "We have taken every precaution to defend your bitcoins from hackers and/or intruders. However, Flexcoin Inc is not responsible for insuring any bitcoins stored in the Flexcoin system. You are entering into this agreement with Flexcoin Inc. You agree to not hold Flexcoin Inc, or Flexcoin Inc's stakeholders, or Flexcoin Inc's shareholders liable for any lost bitcoins."
- jellicle 13y agoIt's almost like they were planning from the get-go to steal all your money.
- hackerboos 13y agoOr more realistically...just protecting themselves legally from the very risky business they are involved in.
- phaed 13y agoAlso from what I understand they only lost the Bitcoins in the hot wallet. Presumably everyone's Bitcoins in cold wallets (the grand majority) are safe and returned to their users.
- mathattack 13y agoHow hard is it to piece apart theft from incompetence?
- lanoozi 13y agoIs something like this a legal ToS in the US? Also, one can argue that if they had truly taken every precaution then either intruders would not be able to break in or they are prepared for such a scenario. Evidently, neither was the case. In other industries standards and "recommendations" exist to state a set of measures companies have to set up in order to be "secure"
- juliangoldsmith 13y agoBitcoin is too new for standards; nobody really knows how to run a business based on Bitcoin yet. Also, even if you take every reasonable precaution, there's still a possibility that your systems can be broken into.
- declan 13y agoCorollary: Even if you take every reasonable legal precaution, there's still a possibility that you can be held liable once the class action lawsuit is filed.
- andrewfong 13y agoYes, but who would pay if you won? The corporation's assets have been stolen, and presumably there aren't enough left over to cover the shortfall (hence the closure of the site). Moreover, unless they screwed up their corporate formalities, the individual shareholders should be protected from this type of loss. Limited liability is one of the main reasons why corporations exist in the first place.
- dragonwriter 13y ago> Moreover, unless they screwed up their corporate formalities, the individual shareholders should be protected from this type of loss. Corporate formalities alone don't prevent piercing the corporate veil.
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- deleted 13y ago[deleted]
- junto 13y agoGuardian has an article on this as well: http://www.theguardian.com/technology/2014/mar/04/bitcoin-bank-flexcoin-closes-after-hack-attack http://www.theguardian.com/technology/2014/mar/04/bitcoin-ba...
- ibmthrowaway218 13y agoExisting discussion (with 111) comments: https://news.ycombinator.com/item?id=7339313 https://news.ycombinator.com/item?id=7339313
- wil421 13y agoBitcoin seems way too prone to being stolen or exploited for me to ever take it seriously. I dont have the same problems with exchanging real money, investing real money, and withdrawing real money.
- deleted 13y ago[deleted]
- compare 13y agoIt's symptomatic of all online wallets with instant automatic withdraw capabilities. Not just limited to Bitcoin. Online wallets, that transfer real money to external third parties (not just an internal credit transfer like Paypal or credit cards, which don't actually remit the money to unverified receivers outside of their system for 30 to 60 days) will all have this problem.
- nly 13y agoIt's not at all required though. You can easily build per-user wallets that employ multisig, where the user has to actually authorise each transfer. If the service shuts down (or gets seized) you just publish your key and users can withdraw their own cash.
- wil421 13y agoWhy would I need an online wallet though. I mean that's what I use my bank for. They even give me a small amount of interest for the money I keep there. Anything not in my bank is in a real wallet in my back pocket.
- _pmf_ 13y ago> I dont have the same problems with exchanging real money, investing real money, and withdrawing real money. That's because there's a huge security net provided by the general public against the fuck-ups of banks, no matter how big.
- silvertonia 13y ago
- goldenkey 13y agoAnd another one bites the dust (due to hacking.) These bitcoin businesses are budding and then thudding far too often. 'We got hacked by ourselves, thank you for contributing to the magnitude of our initial private offering.'
- sp332 13y agoIs 896 BTC a lot to have in a hot wallet?
- nly 13y agoDepends on your instant withdrawal limits. If you want to allow your customers to withdraw many coins instantly then you need many coins in an open wallet ready to give them.
- bitJericho 13y agoThis doesn't happen with regular cash because banks usually take this loss and pass it onto their customers as fees. The exchanges that have closed operate too unintelligently to be able to survive an attack. Almost 900 bitcoins in hot storage? That's almost 500,000 dollars being left in the open. It's like a bank keeping 500,000 dollars in a vault with no lock, no security, and no laws... With p2p coins, hot storage should be just enough for the day's operations and no more. Overdrew for the day? Make the customers wait, it's worth it for the safety.
- iancarroll 13y agoYet nobody will pay fees for a bitcoin wallet.
- exelius 13y agoThis doesn't happen with regular cash because banks have the scale to absorb it and pass it on to their customers. Bitcoin doesn't yet; and even if it did, there's no real way to restrict it. Just as an example, Bank of America has over $2 trillion in deposits. If any minimally significant portion of that amount goes missing, it's pretty easy to track just due to scale. There are policies in place that ensure any transaction above a certain size gets looked at. If there are too many large transactions in a day, that gets investigated too. In exchange for having these safeguards in place, the government is willing to guarantee these deposits in the form of FDIC insurance. Banking regulation is a good thing, especially when you're talking about an anonymous currency where transactions can't be rolled back. EDIT: Just wanted to add that while Bitcoin itself probably will never be a globally significant currency, some form of cryptocurrency is likely to obtain relevance. But some people are going to get burned along the way, and these are the risks that you need to accept if you want to dabble in what amounts to unregulated banking. The regulations exist for a reason.
- mathattack 13y agoWhat advantage will another currency have over Bitcoin, that will trump it's lack of branding? If Bitcoin (with first mover advantage and network effects) fails, wouldn't it be twice as hard for the next to start from scratch? My uninformed intuition tells me it's more likely that there will be a Gold and a Silver - one better, one worse, each used for different things.
- platelets 13y agoIf you have money to piss away then buy some Bitcoins. I'm waiting for an awesome inforgraphic on the amount on money stolen and the likelihood of your bitcoins being stolen.
- JohnTHaller 13y agoThere are 12.4 million bitcoins in existence right now . 750,000 were stolen in the mtgox heist. 174,000 were confiscated by the government from Silk Road and its owner. So, just from these 2 incidents, 7.5% of the bitcoins in existence have either been stolen or seized by the US government. Considering the regular occurrences of thefts from both exchanges and from malware stealing it from people's computers, the percentage is likely much higher.
- deleted 13y ago[deleted]
- jordigh 13y agoOne thing I don't get is... why is everyone storing their bitcoins in someone else's house? Why not store them yourself? To own bitcoins is to own a cryptographic private key. Why is everyone trusting someone else with the ownership of these keys?
- cecilpl 13y agoBecause people are used to dealing with the regulations that go along with other people storing your money. Most people trust places like a bank, an investment brokerage, or paypal to store money, and not have it be "lost to hackers". There are banking regulations and insurance policy that have been around for 100 years to protect people from that kind of thing.
- skwirl 13y agoProbably for the same reason most people don't store cash under their mattress and store it in a bank instead. Of course, storing Bitcoins on your laptop is even more risky than storing cash under your mattress. Someone has to physically enter my house to steal the cash, but to steal my bitcoins? All they need is a virus, spyware, out of date OS, out of date router firmware, out of date NAS firmware, a zero day exploit, etc. and they can drain me of my coins from anywhere in the world. Then of course there is the risk of simply losing the coins. An accidental deletion. A hard drive failure. Losing a laptop or having it stolen. You have to back everything up, you have to back it up offsite, and you have to trust the offsite backup. You have to keep your machines securely locked down. All of this requires the user to be quite tech savvy. This will never change for storing coins locally... so if Bitcoin is going to be the "currency of the future" to be used by the masses then secure banks and exchanges have to be a thing. They also have to be a thing for lending and investing, anyway.
- logfromblammo 13y agoAnd people don't now realize that their mattresses are not connected to the Internet, and therefore the perfect place to securely store a currency that requires a computer to steal it. Though I think I'd put those paper printouts with the QR codes on them in a fire-resistant box, at least.
- thrillgore 13y agoWhy haven't the major bitcoin banks/exchanges banded together and made a set of standards, akin to PCI-DSS to define security standards and implementations for these services? You would think that everyone would do it after MtGox sank. This is starting to leave bad joke territory and I hope it doesn't happen to Coinbase.
- gnaritas 13y agoIt can't happen to Coinbase, they're doing it right with 98% of funds in cold storage[1] and they allowed an outside security audit to prove it. [1] http://antonopoulos.com/2014/02/25/coinbase-review/ http://antonopoulos.com/2014/02/25/coinbase-review/
- Aqueous 13y agoI'm hoping for an actually independent security audit, because antonopolous, despite competing with CoinBase, has a stake in the entire nascent system being considered trustworthy, and therefore a conflict of interest. I'm not saying he wasn't telling the truth - I believe what he says about verifying that CoinBase was in control of its cold storage wallets - but I'm hoping that independent banking authorities can learn enough about BitCoin to conduct independent audits themselves, so that people who have no skin in the game can truly verify that CoinBase's cold storage procedures are adequate.
- wmf 13y agoThe resulting standards would probably be so expensive that they couldn't afford to implement them, or the standards would create an uncompetitive cost structure (see Coinkite). Also, security isn't lean.
- Ethan_Mick 13y agoI'm more and more convinced the only safe way to keep your bitcoins is on your own computer. I have 1 BTC, and it's currently hanging out in my hard drive, with a wallet backup on another hard drive. I suddenly feel much safer.
- brianbreslin 13y agoSo here is what I've learned in dealing with crypto: most of this stuff is NOT written by security experts, the level of code out there is not expertly developed. Lots of this stuff is written by patching together random stuff, or hastily built. This won't be the last robbery story we see for a while. If btc wants to be taken seriously they need to create security standards.
- mpclark 13y agoAs somebody who has been closely watching NFC for years, I find this side of the Bitcoin business interesting. People moan that NFC has been "just around the corner" for the best part of a decade, and some even think that it has missed its opportunity (it hasn't, btw), because it has taken so long to bring to market. This is largely because of the in-built security, and the demands it places on participants' business models. These Bitcoin exchanges and other service providers, on the other hand, seem to have been put together with great haste. They seem to have little-to-no oversight, a high risk profile, untested systems, not much institutional experience -- and there's no safety net for customers. It illustrates why the "old" financial services industry is so cautious when it comes to electronic money. "Move fast and break things" may work for all sorts of businesses, but it's not a good mantra if you're handling money.
- deleted 13y ago[deleted]
- astrodust 13y agoNew mantra: "Move fast, break things, and lose hundreds of millions of dollars by being reckless."
- Kenji 13y agoCorrection: New mantra: "Move fast, break things, and lose hundreds of millions of _other people's_ dollars by being reckless."
- bduerst 13y agoNFC adoption was either killed (or put on hold) by Apple, thanks to their resistance in adopting it for god knows why. Bitcoin exchanges seem to be trying to rebuild the wheel while touting they're not wheels. There are many layers to banks and exchanges, including security and risk reduction, which add to the overall operational cost. These exchanges either thought they were exempt to these same issues or they thought they could skate by without addressing them. It's almost an agency effect - "If other exchanges aren't doing it, why should I increase my costs by doing it?" This line of thinking and deferment of responsibility is what leads to financial crises.
- luka-birsa 13y agoWhat I find interesting is that BTC market does not care about Flexcoin shutting down - prices continue to soar to USD 700 after the MtGox induced drop to ~ USD 500. For me this actually shows promise of real market stabillity in the long run. Image what would happen if a real bank failed in a normal country. Or image what would happen to USD if the largest world bank would fail (destroying 12% of worldwide supply of USD) and nobody would bail them out? Would the drop be worse than 10-20%?
- danielweber 13y agoSo this is actually good news?
- gwern 13y agoAs makes sense. I follow Bitcoin news, and I hadn't even heard of Flexcoin or this other Poloniex.
- antihero 13y agoI was wondering when people would start to realise how easy a target all these sites that store BTC would be. I mean, I trust the banks with my money because they are legally liable for it. Some random website, where you can't audit the code and there's no real legal process for recovery of assets? Yeah that's a great system. The whole point of state-backed currency is to provide stability and make it so there's money you can trust - not some wild west cross-your-fingers system. Yes, countries have failed (e.g. hyperinflation), but at least there are extremely powerful institutions in place who's remit is to prevent that at all cost.
- ilamont 13y agoThis is what the Mt. Gox website said on its front page until last week: You can quickly and securely trade bitcoins with other people around the world with your local currency! Sadly, I think many people trust such marketing claims, partially because they assume the people behind the site know what they are doing, they assume the laws of a developed host economy like Japan are strong enough to prevent companies from making false claims (even while the market itself is unregulated), and, most importantly, they want to believe it will benefit them.
- bkd 13y agoI had about $1 at Flexcoin - not enough to move into cold storage and not enough to move back out. Doesn't matter now of course.
- Cless 13y agoNotice how all these sites use PHP?
- gtirloni 13y agoBitcoin is money. The vast knowledge of handling money is within the financial industry. The Bitcoin crowd do not trust the financial industry, they fight them man. The Bitcoin crowd pays to learn the hard way. News at 11.
- deleted 13y ago[deleted]
- billyhoffman 13y agoThese are very young companies, working with a good that has huge price volatility, resulting in them holding vast amounts of wealth. Ignoring the social, political, and economic debates around bitcoin, these companies have enormous risk and are high profile targets, and have varying ability to protect themselves. All this leads to uncertainty. So then why don't these Bitcoin companies embrace ridiculous amounts of information disclosure and transparency? Don't tell me you "take every precaution." Detail what precautions you are taking. Name an external pentesting firm that tests your infrastructure quarterly. Post their findings a few months after you have address the issues. Open Source everything that you can. Offer bug bounties paid in BTC for security issues discovered. Discuss, in detail, your hot/cold wallet storage setup. Do offensive analysis to determine the most likely attack scenarios, and publish them, along with the layer defense you have put in place to mitigate the risk.
- wehadfun 13y agoWhat I don't understand is why can't the bitcoins can not be seized and returned. If the feds can seize bitcoins obtained illegally through drugs why can't they seize bitcoins obtained illegally through stealing?
- jordigh 13y agoTo own a bitcoin is to own the cryptographic private key that holds those bitcoins. If the bitcoins moved to a new address, then you would need the private keys of the new address. They can be acquired, but it's difficult, since hiding a crypto key is a lot easier than hiding cash.
- unclebucknasty 13y agoAnd, to answer the other part of your parent's question (regarding how the Feds can seize bitcoin), it was always my presumption that the Feds merely used their legal authority to compel their targets to turn over their bitcoin (i.e. private keys, etc.). EDIT: Now that I think of it, it seems like I read somewhere that, with Mt Gox in particular, the Feds seized their ~$5M in BTC a while back by having them transfer it to a wallet under their control. Can anyone corroborate this?
- wmf 13y agoYou could just Google it. The Feds seized a bank account holding 5M USD belonging to MtGox's customers.
- unclebucknasty 13y ago>You could just Google it. Thanks. I'd never heard of Google. What a fantastic invention! Sadly, though, it doesn't appear to help as much with vague recollections, and certainly doesn't seem to pass the Turing test where actual discussion is concerned. In any event, it appears that I've mixed it up with Silk Road, where actual bitcoin was seized. Turns out that it takes a bit more "Googling" (I think I've coined a new verb for this new Google thing) to determine that you have something wrong vs. corroborating that something is true. This all gives me a new idea. I haven't quite fleshed it out yet, but I am tentatively calling it a "discussion forum".