Bitcoin propped up amid currency chaos

 

Gallery

By Stewart Mitchell

Posted on 20 Jun 2011 at 10:38

The price of online currency Bitcoin has fallen through the floor after a security breach, forcing a major exchange to intervene.

Bitcoin was hit by a security scare last week, when one user reported having $500,000 worth of the currency taken from his hard drive.

The digital currency went into free fall on trading site Mt.Gox after another security intrusion saw the exchange's database breached and a large amount of stolen Bitcoins sold off - sparking panic selling of the currency and raising concerns about its future viability.

Bitcoins – which aren't aligned with any major currency, but can be converted into cash at exchanges – fell from being worth $17 per Bitcoin to just a few pence, before Mt.Gox stopped accepting trades for the currency and later rolled the value back to earlier in the day.

We will rollback every trade which happened since the big sale, and ensure this account is secure before opening access again

“The Bitcoin will be back to around $17.5/BTC after we rollback all trades that have happened after the huge Bitcoin sale,” Mt.Gox's Mark Karpeles said on the company website.

“One account with a lot of coins was compromised and whoever stole it (using a Hong Kong-based IP to login) first sold all the coins in there, to buy those again just after, and then tried to withdraw the coins.

“Apart from this, no account was compromised, and nothing was lost. Due to the large impact this had on the Bitcoin market, we will rollback every trade which happened since the big sale, and ensure this account is secure before opening access again.”

Although the rollback of prices in the currency was hoped to have a stabilising effect, some customers were critical that the exchange had intervened to manipulate the price.

As a result of the database breach Mt.Gox warned users to change passwords, and to be on the look out for targeted malware.

“If you receive any email which seems coming [sic] from Mt.Gox asking you to download something (certificate, generating program, etc, do not download,” the company said. “Do not either input your password on any site which is not Mtgox.com.