TORONTO – One of the web’s largest bitcoin exchanges has been forced to temporarily suspend its service after a security breach resulted in the loss of around 19,000 bitcoins.
Bitstamp said Tuesday the breach represents a “small fraction” of its total bitcoin reserves, the majority of which are held in secure offline storage systems.
“We would like to reassure all Bitstamp customers that their balances held prior to our temporary suspension of services will not be affected and will be honored in full,” read a statement posted to Bitstamp’s website.
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The website was suspended Monday after Bitstamp issued a warning to its users encouraging them to refrain from making deposits to previously issued bitcoin deposit addresses.
“Thank you all for your patience, we are working diligently to restore service and hope to have an ETA later today,” tweeted Bitstamp CEO Nejc Kodrič late Monday.
According to Bitstamp’s website, the security breach occurred on Sunday.
Bitcoin uses peer-to-peer (P2P) technology to operate without using banks – it has no paper trail and exists entirely online. Because of this, it is not regulated by any government or financial institution.
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The digital currency, which began circulating in 2009, has experienced major fluctuations in value. Last January, one Bitcoin was priced at about US$950 but has since dropped to the low US$300 range.
It’s unclear when Bitstamp’s systems will be back online. The Slovenia-based company said it’s working with law enforcement officials to investigate the incident.
According to the current bitcoin value, Bitstamp’s loss could total between US$5 and US$6 million in bitcoins.
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