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Bitcoin value drops after Mt Gox halts withdrawals

As Russia looks to ban virtual currency
Mon Feb 10 2014, 13:48
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BITCOIN EXCHANGE Mt Gox has halted withdrawals of the digital currency through its website and cautioned users that other services might also be affected.

Mt Gox has posted a couple of statements about its decision, the first being the initial announcement. It said that "various Bitcoin withdrawals" had raised some issues and that in order to get a proper understanding of the situation it would have to stop processing.

"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," it said.

"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 Mt Gox wallet and can be reinitiated once the issue is resolved. The trading platform will perform as usual for the needs of our customers."

Since then, and presumably following some investigation, it returned to its blog with some updated information.

The service is not being restored yet, it said, and it is possible that its exchange is not the only service affected.

"As you are aware, the Mt Gox 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 Mt Gox Bitcoin wallet to an external Bitcoin address," it said.

"The problem we have identified is not limited to Mt Gox, 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."

In layman's terms the exchange said that a bug in the system means that users can make a withdrawal and then claim not to have got it. Engineers at Mt Gox and Bitcoin are working on a fix for this.

Perhaps unsurprisingly the news has had a negative impact on the fluctuating Bitcoin exchange rate.

Also likely to hit Bitcoin value are reports that Russia is ready to ban trade in Bitcoins. Reuters reported that Russian authorities are concerned that the currency could be used in criminal activity.

"Systems for anonymous payments and cyber currencies that have gained considerable circulation - including the most well-known, Bitcoin - are money substitutes and cannot be used by individuals or legal entities," the Russian Prosecutor General's Office said, according to the wire service. µ


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