Bitcoin Exchanges Attacked by Hackers

The turbulent recent history of virtual currency Bitcoin continues with the two largest Bitcoin-trading exchanges being targeted by hackers Tuesday and leaving customers unable to make withdrawals.

Slovenia-based Bitstamp said it halted customer withdrawals to deal with the issue, while Bulgaria-based BTC-e reported that it was experiencing delays in crediting certain transactions. During such outages, some trading can continue, but customers aren’t able to gain access to their money.

Both exchanges reported the problem on the respective websites and described it as a denial-of-service (DoS) attack, in which hackers essentially disable a website by flooding it with information requests. The two exchanges collectively account for 56% of Bitcoin trading volume, according to bitcoincharts.com, which tracks trading activity.

“This is a very big deal,” said Jaron Lukasiewicz, chief executive (CEO) of New York-based Bitcoin-trading platform Coinsetter, told the
Wall Street Journal
. Coinsetter’s operations were not affected by the hacking. “The two largest Bitcoin exchanges aren’t processing withdrawals – that essentially shuts the ecosystem down.”

Although details about the incident were limited, Bitstamp linked the problem to a ‘transaction malleability’ issue that prompted the Tokyo-based
Mt. Gox exchange
to halt withdrawals last week. BTC-e didn’t elaborate on its problems in the statement on its website.

Mt. Gox has blamed its issue on a glitch in the Bitcoin software that could potentially give rogue traders a way to falsify transactions and said that it is not the only exchange experiencing the problem.

Bitstamp added that a DoS attack had triggered ‘inconsistent results’ in the virtual wallet that holds Bitcoin for its customers.

“As such, Bitcoin withdrawal processing will be suspended temporarily until a software fix is issued,” the exchange said in its statement. It stressed that no funds had been lost and none were at risk.

Bitstamp said the problems “have simple solutions that are being implemented as we speak, and we’re confident everything will be back to normal shortly.”

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