Bitstamp suspends Bitcoin withdrawals

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Bitstamp has suspended customer withdrawals of Bitcoins from the site to their own wallets. Bitstamp’s action follows a similar suspension imposed by Mt Gox imposed last week.

Slovenia-based Bitstamp claimed a denial-of-service attack to have triggered “inconsistent results” in its Bitcoin wallet. The exchange said in a statement “As such, Bitcoin withdrawal and deposit processing will be suspended temporarily until a software fix is issued,” noting that “No funds have been lost and no funds are at risk.”

The exchange said “Bitstamp’s exchange software is extremely cautious concerning Bitcoin transactions.”

“Currently it has suspended processing Bitcoin withdrawals due to inconsistent results reported by our bitcoind wallet, caused by a denial-of-service attack using transaction malleability to temporarily disrupt balance checking.”

Mt Gox also cited transaction malleability as the primary reason for Bitcoin withdrawal suspension.

Bitstamp, however, has made it clear in its post that these misunderstandings have simple solutions that are being implemented and everything will be back to normal shortly. The exchange added that they will be cancelling all the failed withdrawals on 10th and 11th February and the amounts will be added to the customer account balances.

The Bitcoin Foundation said “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.”

When Mt Gox froze its transactions last week, Bitcoin’s value declined about 19 percent from more than $800 to less than $600. Bitstamp has a higher 30-day trading volume of $358.3 million compared to Mt Gox’s 30-day trading volume of $259.5 million and the suspension could result in another Bitcoin price plunge.