Self-styled Bitcoin bank Flexcoin has been forced to close its doors after hackers pilfered around $600,000 of its online funds, after exploiting a weakness in the site's front-end systems.
The company confirmed the flaw affected the code that allows Bitcoin transfers to take place between users.
"By sending thousands of simultaneous requests, the attacker was able to move' coins from one user account to another until the sending account was overdrawn, before balances were updated," Flexcoin said in a statement.
"This was then repeated through multiple accounts, snowballing the amount, until the attacker withdrew the coins."
The Canadian virtual currency exchange also revealed the attackers stole 896 Bitcoins ($574,000) and it cannot afford to cover this loss.
"As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately," the statement read.
The organisation went on to add that it was working with the authorities to trace the hackers, having already assured some users that their funds are safe.
As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.
"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," the organisation stated.
The company stressed that it made every attempt to keep its servers secure, and - in the past has seen off "thousands" of hacking attempts.
"Having this be the demise of our small company, after endless hours of work we've put in, was never our intent. We've failed our customers, our business, and ultimately the Bitcoin community," the statement concluded.
News of Flexcoin's demise comes hot on the heels of the announcement that Mt.Gox, once the world's biggest Bitcoin exchange, has filed for bankruptcy protection in Japan after hackers stole millions of pounds of Bitcoins.
Earlier this week, Bitcoin exchange Poloniex confirmed that 12.3 per cent of its stash had also been taken by hackers.
In another sad twist in the Bitcoin saga, reports emerged earlier today that Autumn Radtke, CEO of Singapore-based Bitcoin exchange First Meta, was found dead in an apartment in Singapore last month.
The Singapore Police Force are investigating the cause of death, which has been described as unnatural.
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