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article imageBitcoin takes a plunge due to software flaw that allowed fraud

By D.M. McGrory     Feb 10, 2014 in Business
The price of Bitcoin has dived after one of the largest Bitcoin exchanges, Japan’s Mt Gox, suspended withdrawals due to a technical issue.
The price of the peer-to-peer payment system tumbled 16 per cent to $572.40 immediately after the Tokyo-based company posted a statement on Monday morning (10th February) saying that suspension was due to a bug in the bitcoin software that was “not limited to MtGox and affects all transactions where bitcoins are being sent to a third party.”
In the release MtGox states that the defect made it possible for Bitcoin users to alter transaction details and make it appear as if a transfer of bitcoins to a Bitcoin wallet had not taken place and the coins could be traded again. The company had taken action after noticing “unusual activity” and on locating transactions that needed “to be examined more closely.”
Bitcoin transactions to a MtGox address and withdrawals to traditional currencies are not affected. The exchange said this “technical issue” had been largely ignored and that it now knows how to resolve but this would need to be approved and standardised.
As one the most popular places to buy and sell bitcoins, MtGox has seen its dominance decline over the past 12 months with the rise of competitors including BTC China, Bitstamp and Coinbase. Neither BTC China and Coinbase have reported similar problems and Bitstamp quotes bitcoin as trading strongly at $630.
The Financial Times reports that MtGox has for some weeks faced complaints from customers "experiencing delays in withdrawing dollars from their accounts with the exchange, before the latest problem prevented withdrawals in Bitcoin."
MtGox has long experienced banking problems that have caused lengthy delays in the processing of overseas wire transfers.
Dedicated crypto currency website Cryptocoins has added to the announcement stating that the flaws reported today "portray characteristics of the Bitcoin system well known since at least 2011" and that the characteristics "are annoying but don’t inhibit basic operation." They also claim that the announcement sounds somewhat "spun."
More about bitcoin, Finance, cryptocurrency, Mt Gox
 
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