14 DAY TRIAL // Mt. Gox, the world’s largest Bitcoin exchange service, and Bitcoin wallet website Instawallet have both been targeted by cybercriminals.
First, Instawallet has reported that it has suspended the service indefinitely until it can develop an alternative architecture. The reason: the company’s systems have been hacked.
“Our database was fraudulently accessed, due to the very nature of Instawallet it is impossible to reopen the service as-is. In the next few days we are going to open the claim process for Instawallet balance holders to claim the funds they had stored before the service interruption,” the site’s representatives stated.
On the other hand, Mt. Gox reports being hit by a major distributed denial-of-service (DDOS) attack.
“Since yesterday, we are continuing to experience a DDoS attack like we have never seen. While we are being protected by companies like Prolexic, the sheer volume of this DDoS left us scrambling to fine-tune the system every few hours to make sure that things don’t go beyond a few 502 error pages and trading lag,” Mt. Gox representatives wrote on Facebook.
According to Mt. Gox, the attackers might be trying to destabilize Bitcoin and, at the same time, abuse the system to make money.
By attacking Mt. Gox, they can cause some major damage to Bitcoin because the exchange is responsible for over 80% of USD trades and more than 70% of all currencies.
In addition, the attackers can make a profit by waiting until Bitcoin reaches a certain value and then sell their assets. They destabilize the currency (by launching DDOS attacks against major exchange services) and wait for everyone to start panic selling their Bitcoins.
Once the price drops, they purchase large amounts and wait until the value of Bitcoin increases again.
“Does this mean that we are giving up fighting lag? Hell, no. We are working on it by creating a new trade engine that will solve many problems, but it’s not a magic bullet. We can always try to scale our servers, but we cannot predict what happens from external sources: DDoS, panic selling, immediate increase of buyers, etc.,” Mt. Gox stated.
In the meantime, the company advises customers not to panic sell their Bitcoins.