Bitcoin Forum

Online services and exchanges dealing in Bitcoins have been hit by hack attacks that led to a drop in the value of the virtual currency.

Trading on the MTGox exchange, which handles most trades in Bitcoins, was sluggish yesterday as the site fought off an attack.

The attack helped to force a swift fall in the price of Bitcoins.

In addition, the Instawallet website - where people store Bitcoins - is offline indefinitely after an attack.

Website bombarded
The value of Bitcoins surged to a new high this week with each one worth about $142 (£94). Barely a week ago, each virtual coin was worth only $90.

But Bitcoins dropped sharply in value as the MTGox exchange came under a sustained attack by hackers. The vast majority of trade in Bitcoins takes place via the site.

In a tweet on its Twitter feed, MTGox said it was fighting off a distributed denial-of-service (DDoS) attack, which involves a site being bombarded with huge amounts of data. The attack was one of several against the site this week,

The attacks, coupled with a spike in trading volumes, combined to cause delays in trades being confirmed and led the value of Bitcoins to drop sharply to about $120.

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The attacks could be the work of malicious hackers who were trying to "game" the exchange and manipulate the value of Bitcoins so they could cash in, MTGox said in an interview with ComputerWorld. Attackers are thought to be working to a cycle in which they sell Bitcoins when values are high, then mount an attack that forces prices to crash, buy up the cheaper coins and then let the value climb again.

MTGox said it did not know when or if the attacks would cease but said Bitcoin owners should not panic and sell off as values fluctuated. A spokesman for the exchange added that it was in the middle of rebuilding its trading technology but the new system, which would do a better job of handling the high volume of trades, would not be ready until the end of this year.

In a separate development, Instawallet has shut down "indefinitely" after hackers "fraudulently accessed" its core database. In a statement posted on the Instawallet site it said it planned to open a claim process shortly so people could reclaim their Bitcoin balance.

As far as I know, a distributed denial-of-service attack doesn't allow anyone to profit from sudden moves in the exchange rate of BTC. I mean, how can a speculator profit from a situation where he can't execute any transaction orders? If speculators really want to manipulate the market by selling high / buying low, the last thing they need is a DDoS…
In my opinion this is a government attack with the objective of undermining the credibility of P2P virtual currencies. The Federal Reserve System and the European Central Bank are both ‘printing’ money to compensate their huge deficits and they need to guarantee that no one is in a position to threat the established faith in their fiat money.
And of course they see the rise of BTC and similar alternatives as a major threat to that faith, because their rise is the living proof that USD and EUR are being constantly debased.

1. Ddos attackers attack mt gox

2. People panic and sell bitcoins pushing price down

3. Ddos attackers buy bitcoins at low price

4. Ddos attackers wait until price climbs and sell - make $$$

Ddos attackers do not do that. Nobody panic sells  ::)

Yeah, I don't think they panic. It's quite normal to see DDOS on bitcoin website.

I dont understand - how do you explain drop in price? Someone has to sell a substantial amount of bitcoin at a lower price after the ddos attack for the price to dip. This is panic selling. People scared the price is going to go even lower and sell. This is the only way price can go down.

Read the date of the OP - this happened early April - it's not happening now...

I know - i wanted to respond to the poster who didnt think there was any waynfor the attackers to profit.

If you're going to copy a news article verbatim, the least you can do is add the URL you copied from:

4 April 2013: Hack attacks hit Bitcoin exchange rates
http://www.bbc.co.uk/news/technology-22026961