Bitcoin Exchange Mt. Gox Targeted by Cyber Attack
By Matt Egan
Published March 29, 2013
FOXBusiness
Just as Bitcoin explodes beyond the
$1 billion mark thanks to Europe’s debt crisis, the emerging virtual currency
was dealt a setback this week after a key exchange was hit by a powerful cyber
attack that caused delays.
Coupled with other recent technical
glitches, this week’s distributed denial of service (DDoS) attack against
Bitcoin exchange Mt. Gox cuts into one of the electronic currency’s greatest
selling points: its relative safety compared with deposits in Cyprus.
In a message posted on its official
Twitter account, Japan-based Mt. Gox told users Thursday night it was
“experiencing a major DDoS” attack. Within hours Mt. Gox said the issue had
been resolved.
The exchange didn’t respond to a
request for further comment on the DDoS attack.
According to the Mt. Gox website, it
is the “world’s most established Bitcoin exchange” and the only multi-currency
Bitcoin trading platform.
"This attack demonstrates both
the worth of Bitcoin and the value of its business availability. Now there are
new risks to both,” said Carl Herberger, vice president of security solutions
at Radware (RDWR).
Earlier this week payments startup
Dwolla, which is also used to trade Bitcoins, suffered from an apparent DDoS
attack as well.
Established in 2009, Bitcoin has
emerged as a winner in the controversy surrounding Europe’s decision to “bail
in” bank depositors in Cyprus to pay for a rescue of the tiny island country’s
outsized banking system.
The virtual currency is built on an
open-source software code and unlike traditional currencies is highly decentralized,
making it appealing to those worried about the safety of the monetary system.
Bitcoin also says its accounts can’t be seized by local authorities, setting it
apart from bank deposits in Cyprus.
Underscoring the surge of activity
in the virtual currency, one Bitcoin traded as high as $93.06 on Friday, up a
whopping 125% from the beginning of March. The value of Bitcoins outstanding
has also now surpassed the $1 billion threshold.
Bitcoin “is clearly having a
breakthrough moment here, and a deeply surprising one given its novelty and
nascent infrastructure,” Nicholas Colas, chief market strategist at ConvergEx,
wrote in a recent note.
However, Bitcoin has also faced
technical glitches, including one on March 12 that caused the currency’s value
to briefly tumble 23% before recovering.
“Bitcoin is of course wholly
dependent upon the functioning of the Internet,”said Daniel Friedberg, a
financial-services attorney at Seattle law firm Graham & Dunn who has a
Bitcoin client base.
“Users of Bitcoin are not used to
any ‘down time’ and have grown accustomed to being able to immediately convert
the Bitcoin virtual currency into real legal tender, 24 hours a day, 7 days a
week. Any disruption at all creates customer complaints,” he said.
Bitcoin isn’t alone in grappling
with cyber attacks. Hacktivists have increasingly set their sets on the U.S.
financial system, slowing access to the websites of big banks like J.P. Morgan
Chase (JPM) and Bank of America (BAC) in recent months.
Earlier this week Wells Fargo (WFC), the largest U.S. bank by market capitalization,
acknowledged its consumer banking website was the victim of a DDoS attack.
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