GRB 070610 is a typical high-energy event with a duration of 5s.Yet within the burst localization we detect a highly unusual X-ray and optical transient, SwiftJ195509.6+261406. We see high amplitude X-ray and optical variability on very short time scales even at late times. Using near-infrared imaging assisted by a laser guide star and adaptive optics, we identified the counterpart of SwiftJ195509.6+261406. Late-time optical and near-infrared imaging constrain the spectral type of the counterpart to be fainter than a K-dwarf assuming it is of Galactic origin. It is possible that GRB 070610 and Swift J195509.6+261406 are unrelated sources. However, the absence of a typical X-ray afterglow from GRB 070610 in conjunction with the spatial and temporal coincidence of the two motivate us to suggest that the sources are related. The closest (imperfect) analog to Swift J195509.6+261406 is V4641 Sgr, an unusual black hole binary. We suggest that Swift J195509.6+261406 along with V4641 Sgr define a sub-class of stellar black hole binaries -- the fast X-ray novae. We further suggest that fast X-ray novae are associated with bursts of gamma-rays. If so, GRB 070610 defines a new class of celestial gamma-ray bursts and these bursts dominate the long-duration GRB demographics

Substantially revised since additional late-time observations indicate the optical/IR counterpart to GRB070610 is very faint. Precise astrometry indicates that the original spectrum was of a very nearby brighter star but not the counterpart to GRB070610. Full resolution figures at http://www.astro.caltech.edu/~mansi/g070610.ps