Bitcoin exchanges suspend conversions as hacker attack intensifies
Three online exchanges for the bitcoin virtual currency have suspended conversions into state-backed currencies, saying they are under attack from hackers suspected of trying to create fraudulent transactions.
The value of the currency has plunged as the attack has intensified, from $926 on 5 February to $530 on 12 February on MtGox, one of the affected exchanges. Bitstamp, based in Slovenia, and BTC-e, in Bulgaria, also halted withdrawals indefinitely on Wednesday as they came under attack.
The moves follow crackdowns by China in December and Russia last week on use of the cybercurrency, which some authorities fear could be used for money laundering, funding terrorism or tax evasion.
“This is a denial-of-service [DoS] attack,” said Jinyoung Lee Englund, a spokeswoman for the Bitcoin Foundation, a trade organisation for exchanges. “Whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming. It’s important to note that DoS attacks do not affect people’s bitcoin wallets or funds.”
In a statement, MtGox said: “A bug in the bitcoin software makes it possible for someone to use the bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be re-sent.” Such “double spending” could destroy trust in the system.