Tuesday, July 25, 2017 by Ethan Huff
The mainstream media is reporting an uptick in cyber attacks against several major Bitcoin exchanges that have some in the cryptocurrency world reeling with concern. A flood of new Bitcoin investors into the market is already putting immense strain on the buying and selling process, which is only being exacerbated by distributed denial-of-service attacks, also known as DDoS, that are further crippling the overwhelmed exchanges by flooding them with information.
According to reports, Bitfinex, the largest U.S. dollar-based Bitcoin exchange in the world, recently reported “ongoing” DDoS attacks on its website that have made it difficult for Bitcoin holders to conduct trades. While Bitfinex stated that most users were still able to use the website despite the problem, the platform has continued to ebb in and out of operation.
The attack on Bitfinex followed a similar one reported by a smaller Bitcoin exchange known as BTC-e, which “tweeted” about its website being temporarily taken down by ongoing DDoS attacks. When the attack apparently ceased and all seemed to be back up and running as normal, BTC-e took down the tweet and continued its operations as normal.
DDoS attacks against Bitcoin exchanges are an ongoing problem that creates occasional hazards for the blockchain. And as more and more people jump on the Bitcoin train with the hope of establishing a more secure store of value for their wealth and assets, the attacks only seem to increase, calling into question the long-term viability of this type of system. (RELATED: For a comprehensive look at the ever-changing world of Bitcoin, check out Bitcoin.Fetch.news)
“Investors with assets on centralized cryptocurrency exchanges should be careful,” warns Benjamin Roberts, co-founder and CEO of Citizen Hex, a digital currency trading startup that is currently backed by three different Canadian venture funds. “The track records of these organizations are not good, and as the assets on the exchanges grow, so does the bounty for attacking or hacking them.”
It’s not just Bitcoin exchanges that are having problems – so are some Bitcoin wallets. One of these is the popular Bitcoin wallet Coinbase, which has apparently been seizing the accounts of some of its users in Hawaii and Wyoming, barring Bitcoin owners from rightfully accessing their digital currency holdings.
Citing some obscure state laws that it claims allow the company to seize accounts without any cause or reason, Coinbase is effectively “stealing” Bitcoins from its users who reside in either of these two states.
“Although we strive to provide continuous access to Coinbase services, Coinbase has indefinitely suspended its business in Wyoming and we regret that we cannot currently support services in Wyoming,” reads a message posted to the website whenever Wyoming-based users attempt to log in and see their Bitcoin holding balances. “You can find a further explanation of our account suspension policy here. We hope to restore service in Wyoming soon, so please check back again.”
When users click on the suspension page, they are told that Coinbase “cannot currently project if or when our services may be restored.” The obvious solution would be for these users to simply log in and change which state they live in, right? But even this isn’t being allowed by the Coinbase system, which displays a chilling message upon attempted login: “Unable to create account.”
The whole thing seems eerily similar to what happened with the Mt. Gox Bitcoin exchange, which had been the world’s most popular Bitcoin wallet prior to it suddenly shutting down. Mt. Gox users had their Bitcoin wallets stolen by the service, which was never heard from again after it disappeared from the Bitcoin market.