Apple TV2 Not restoring - Unknown Error 14

My ATV2 started showing blank screen (while constantly trying to choose either 720p or 480p), with it's LED blinking rapidly. I've tried to restore / reset it with the remote and in iTunes.

Nothing works.

When connected, when I connect the ATV2 to my TV, it shows the iTunes logo and usb cable????

ATV shows in iTunes (via micro usb), I can start the restore procedure, but at the point of 'Verifying Apple TV restore with Apple' restore drops with the error message 'The Apple TV could not be restored. An unknown error occurred (14)'.

ATV has not been jailbroken. Latest update was about a month ago...

Is there something I'm missing?