Denial-of-service attacks brought several major Bitcoin exchanges to their knees this week, leaving traders locked out of the system, as hackers reap the market rewards.
Ongoing Cyber Attacks
The DDoS attacks, timed to occur during intense periods of trading, gain the hackers a market advantage during price swings. Allowing them to game the price difference on compromised exchanges. Users are left locked out of the system during what could be crucial time periods of market activity.
Bitfinex, the largest U.S dollar-based bitcoin exchange has admitted that their platform was under DDoS attack. However, despite what they refer to as ongoing attacks, they do say that “Most users will be able to use the platform normally.” and released the following tweet;
The platform is returning to normal operations. We are closely monitoring the the situation
— Bitfinex (@bitfinex) June 13, 2017
BTC-e is also believed to have been affected, as their site went down temporarily. They also posted a tweet acknowledging the issue though it has since been deleted.
Market Fears and Due Caution
While no coins were directly stolen from users during the attacks, the ensuing instability caused significant chaos nonetheless. Those who remember, or were victims of, the disappearance of the Mt.Gox and Cryptsy exchanges, know that Bitcoins should not be left on these platforms in case of more catastrophic attacks.
Users engaged in Margin trading on these sites are particularly at risk as they are unable to close their positions and stand to lose a lot of money if no stop-loss measure has been put in place.
In an interview with CNBC, Benjamin Roberts, co-founder and CEO of digital currency trading start-up Citizen Hex offered this warning to cryptocurrency investors:
Investors with assets on centralized cryptocurrency exchanges should be careful. 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.
Unprecedented New Interest In Bitcoin
Bitcoin exchanges are also under the pressure of a surge of new users who are noticing Bitcoins price gains. The price of Bitcoin climbed to $3000 this week before plunging down to $2400, a move which does nothing to allay fears about the famously volatile coin.
Bitcoin exchange Coinbase has struggled to keep up with the massive influx of new customer registrations. CEO Brian Armstrong recently tweeted:
https://twitter.com/brian_armstrong/status/868228622523523072
The CoinBase site has been down this week too, something they put down to the high traffic they were experiencing.
Should the exchanges be doing more to protect their users? Are they improving? Have you had an experience with the exchanges you’d you like to let Bitcoinist know about? Let us know in the comments below.
Images courtesy of Twitter, Shutterstock