Widespread DDoS On Many Exchanges Halts Bitcoin Withdrawals

Major bitcoin exchanges, including Bitstamp and BTC-e, announced delays in bitcoin withdrawals yesterday following distributed denial of service (DDoD) attacks.

Major bitcoin exchanges, including Bitstamp and BTC-e, announced delays in bitcoin withdrawals yesterday following distributed denial of service (DDoD) attacks.  In its letter to clients, Bitstamp related that failed withdrawals will be credited back to accounts, while BTC-e stated via Twitter that withdrawals from the 10th and 11th will be delayed.  At BTC-e, the problems were first experienced on Monday, as the company announced it had temporarily suspended bitcoin withdrawals before reinstating them later in the day. Commenting to DC Magnates on Monday, BTC-e initially attributed the delay on a “Temporary delay due to re-indexing blocks on the wallet”, but the issues now appear to have been a larger more widespread problem.

Commenting about the DDoS attacks, Gavin Andersen, Chief Scientist at the Bitcoin Foundation posted an update on the foundation’s blog.  In it he explained that the current suspension of withdrawals taking place at several exchanges is due to the transaction malleability issue that MtGox attributed to its bitcoin processing problems and “ relaying mutated versions of transactions”.  However, he added that although the DDoS attacks are taking place, bitcoins aren’t being stolen as he said “It’s important to note that DoS attacks do not affect people’s bitcoin wallets or funds.”  In response to the attacks, Andersen stated that core developers, exchanges, and major mining pools are working together to create solutions.

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Why Attack?

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If the current DDoS attacks are unsuccessful at stealing bitcoin, why is the attack taking place?  In an interview with Chief Security Officer at Blockchain.info, Andreas M. Antonopoulos on CoinSpectator, he attributed the attacks on the attempt to find other exchanges like MtGox that are vulnerable to transaction malleability.  He compared it to a “retail customer showing up at a customer service desk with a photoshopped receipt and trying to get a refund”.  In terms of MtGox, Antonopoulos said they were “fooled”, but other major exchanges aren’t.

Price Reaction

As can be expected, following the collapse of prices at MtGox, traders were quick to sell when similar problems were being reported at other exchanges.  As such, on both BTC-e and Bitstamp, after trading most of the first of Tuesday at $700, prices spiked lower to lows of just above $620, before rebounding back to the $670 level.  However, with issues continuing today, and no updates as of yet about when withdrawals will take place at either BTC-e or Bitstamp, prices of bitcoins are again lower to start Wednesday at around $650.

(Image courtesy of Deviantart)

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