Bitcoin exchange to resume withdrawals after slump

Major bitcoin exchange Mt Gox announced on Monday that users should soon be able to withdraw funds from their accounts amid growing tensions and a price collapse for the virtual currency.
Japan-based Mt Gox is the second-biggest bitcoin exchange in the world – representing around 18 percent of total bitcoin trade in the last week, according to A halt in withdrawals last weekend left customers unable to transfer their investments into U.S. dollars.
The price of the virtual currency has plunged to below $300 on the exchange in recent days, compared to a figure of around $650 on other major exchanges. Bitcoin had traded above $1,200 at its peak back in November but has since halved in price.

In a new statement on Monday Mt Gox apologized for the inconvenience caused by the recent suspension of external bitcoin transfers and said that it had implemented a workaround that should enable withdrawals and mitigate any issues.

“With this new system in place, Mt Gox should be able to resume withdrawals soon. At the beginning we will do so at a moderated pace and with new daily/monthly limits in place to prevent any problems with the new system and to take into account current market conditions,” it said in a statement on its website on Monday.
“We will update everyone again by Thursday at the latest.”

Withdrawals were halted last week as the exchange’s technical team investigated a problem with the way bitcoin withdrawals were processed. This followed several weeks of users complaining of slow withdrawal rates. Mt Gox blamed its ongoing technical issues on a critical flaw in the cryptocurrency which it said affected all exchanges.
It detailed a bug in the bitcoin software that made it possible for people to use the bitcoin network to alter transaction details. That could give the false impression that bitcoins had not been sent to a bitcoin wallet, when in fact they had.
Mt Gox caused anger in the bitcoin community when it blamed the fault on this issue — known as called “transaction malleability”. A representative from the Bitcoin Foundation, an organization that aims to promote and protect bitcoin, hit back at Mt Gox’s claims, saying that it was actually due to its highly customized software, its customer support procedures, and its unpreparedness.
This war of words continued with Mt Gox chief executive Mark Karpeles suggesting to Forbes magazine on Thursday that the flaw ought to have been solved by the Bitcoin Foundation as it has been known about since 2011.

The “Fast Money” crew reacts to tech investor Marc Andreessen’s comments on Bitcoin. And trader Brian Kelly sees promise in the digital currency.
Mt Gox has been described as the “original” bitcoin exchange by fans of the digital currency who see it as facilitating its fledgling growth in the early days of the technology. Mt Gox once claimed that it handled around 80 percent of all global dollar trades for the currency. However, the exchange hasn’t been without its own set of public relation disasters.
It recently experienced lengthy delays when exchanging bitcoin into U.S. dollars and has previously experienced high-profile DDoS (distributed denial-of-service attacks) hacking attacks which slow down its user experience. Meanwhile, the U.S. Department of Homeland Security seized its bank account in May 2013, saying it had never properly registered as a money services company.
Customers have taken to social media to express their dissatisfaction about the latest halt to trade, and bitcoin news website CoinDesk reported on Friday that a small protest had been conducted outside the offices of Mt Gox in Tokyo.

Bitcoin is a “virtual” currency that allows users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining. Some 12 million bitcoins are believed to be in circulation, with a cap of 21 million — meaning no more bitcoins can be created after that point.

—By’s Matt Clinch; Follow him on Twitter @mattclinch81

Bitcoin Price Tumbles Over %50 In Six Days On News Of Bugs, Exchange Glitches and DDoS Attacks


Important Announcement: In order for our team to resolve the BTC withdrawal issue it is necessary for a temporary pause on all external bitcoin withdrawal requests in order to obtain a clear technical view of the current processes. We have updated our statement on this matter HERE. The MtGox trading platform, deposits, and withdrawals will perform as usual for the needs of our customers.
Dear MtGox Customers and Bitcoiners,

As you are aware, the MtGox team has been working hard to address an issue with the way that bitcoin withdrawals are processed. By “bitcoin withdrawal” we are referring to transactions from a MtGox bitcoin wallet to an external bitcoin address. Bitcoin transactions to any MtGox bitcoin address, and currency withdrawals (Yen, Euro, etc) are not affected by this issue.

The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending bitcoin withdrawals until this technical issue has been resolved.

Addressing Transaction Malleability
MtGox has detected unusual activity on its Bitcoin wallets and performed investigations during the past weeks. This confirmed the presence of transactions which need to be examined more closely.

Non-technical Explanation:
A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue.

Technical Explanation:
Bitcoin transactions are subject to a design issue that has been largely ignored, while known to at least a part of the Bitcoin core developers and mentioned on the BitcoinTalk forums. This defect, known as “transaction malleability” makes it possible for a third party to alter the hash of any freshly issued transaction without invalidating the signature, hence resulting in a similar transaction under a different hash. Of course only one of the two transactions can be validated. However, if the party who altered the transaction is fast enough, for example with a direct connection to different mining pools, or has even a small amount of mining power, it can easily cause the transaction hash alteration to be committed to the blockchain.

The bitcoin api “sendtoaddress” broadly used to send bitcoins to a given bitcoin address will return a transaction hash as a way to track the transaction’s insertion in the blockchain.
Most wallet and exchange services will keep a record of this said hash in order to be able to respond to users should they inquire about their transaction. It is likely that these services will assume the transaction was not sent if it doesn’t appear in the blockchain with the original hash and have currently no means to recognize the alternative transactions as theirs in an efficient way.

This means that an individual could request bitcoins from an exchange or wallet service, alter the resulting transaction’s hash before inclusion in the blockchain, then contact the issuing service while claiming the transaction did not proceed. If the alteration fails, the user can simply send the bitcoins back and try again until successful.

We believe this can be addressed by using a different hash for transaction tracking purposes. While the network will continue to use the current hash for the purpose of inclusion in each block’s Merkle Tree, the new hash’s purpose will be to track a given transaction and can be computed and indexed by hashing the exact signed string via SHA256 (in the same way transactions are currently hashed).

This new transaction hash will allow signing parties to keep track of any transaction they have signed and can easily be computed, even for past transactions.

We have discussed this solution with the Bitcoin core developers and will allow Bitcoin withdrawals again once it has been approved and standardized.

In the meantime, exchanges and wallet services – and any service sending coins directly to third parties – should be extremely careful with anyone claiming their transaction did not go through.

Note that this will also affect any other crypto-currency using the same transaction scheme as Bitcoin.

To put things in perspective, it’s important to remember that Bitcoin is a very new technology and still very much in its early stages. What MtGox and the Bitcoin community have experienced in the past year has been an incredible and exciting challenge, and there is still much to do to further improve.

MtGox will resume bitcoin withdrawals to outside wallets once the issue outlined above has been properly addressed in a manner that will best serve our customers.

More information on the status of this issue will be released as soon as possible.

We thank you for taking the time to read this, and especially for your patience.

Best Regards,
MtGox Team

More Bitcoin Exchanges Forced Out of Sync After Massive DDoS Attack
An anonymous reader tipped us to news that several Bitcoin exchanges have joined Mt Gox in suspending withdrawals after being forced out of sync with the Bitcoin network at large. After Mt Gox blamed transaction malleability for forcing them to suspend withdrawals, miscreants started flooding at least Bitpay and Btc-e with bogus transactions. Quoting the Bitcoin Foundation:
“Somebody (or several somebodies) is taking advantage of the transaction malleability issue and relaying mutated versions of transactions. This is exposing bugs in both the reference implementation and some exchange’s software. We (core dev team, developers at the exchanges, and even big mining pools) are creating workarounds and fixes right now. This is a denial-of-service attack; whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming. It’s important to note that DoS attacks do not affect people’s bitcoin wallets or funds. “

Mt. Gox Bitcoin Exchange Halts Withdrawls, Bitcoin Price Tumbles %33

Statement Regarding BTC Withdrawal Delays – UPDATE
Posted: Feb 07 14:34 JST

Dear MtGox Customers,

In our efforts to resolve the issue being encountered by various bitcoin withdrawals, it was determined that the increase in the flow of withdrawal requests has hindered our efforts on a technical level. To understand the issue thoroughly, the system needs to be in a static state.

In order for our team to resolve the withdrawal issue it is necessary for a temporarily pause on all withdrawal requests to obtain a clear technical view of the current processes.

We apologize for the sudden short notice. All bitcoin withdrawal requests will be on pause, and the withdrawals in the system will be returned to your MtGox wallet and can be reinitiated once the issue is resolved. The trading platform will perform as usual for the needs of our customers. 

Our team will resolve this problem as soon as possible and will provide an update on Monday, February 10, 2014 (JST).

We deeply apologize for the inconvenience caused, and thank you for your kind support and considerations. 


The MtGox Team

bitcoin falls 33

BitFinex Bitcoin Exchange Experiences Major Margin Limit Accounting Glitch

BitFinex Bitcoin Exchange Experiences Major Margin Limit Accounting Glitch

Starting the evening of Tuesday Feb 5, 2014, the Hong Kong based bitcoin exchange BitFinex experienced a MAJOR Margin Limit Accounting Glitch.

I had about BTC 0.38 in my account (approx $300 USD), and suddenly could trade with a margin of over $130,000!
I was able to make a few small trades before the error was notices, the exchange locked up, and the error was fixed. My outstanding position with over $4000 in ‘overdrawn’ margin was promptly cancelled by morning.

If I ever see this glitch again I will not hesitate to take out a $130,000 position and trade with it.