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.
The Mt. Gox collapse represents a far bigger blow to bitcoin's credibility. That downfall wiped about 750,000 bitcoins, or about 6 percent of the currency's total circulation. Mt. Gox, which is based in Japan, has filed for bankruptcy protections while it sifts through its financial mess.
But the timing of Flexcoin's collapse could make it more difficult to foster trust in bitcoin.
Supporters are touting the five-year-old currency as a way to lower transaction fees by cutting out banks and payment processors that collect billions of dollars annually by serving as financial middlemen. Skeptics, including government leaders around the world, deride bitcoins as a currency suitable only for speculators.