US subpoenas handed out in mounting Bitcoin crisis

Shuttered exchange Mt Gox, others served in cyber attack investigation

Tags: Cyber crimeJapanMt Gox (mtgox.com)USA
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US subpoenas handed out in mounting Bitcoin crisis Cyber pranksters exploited a flaw in bitcoin’s software platform, known as 'transaction malleability'.
By  Stephen McBride Published  February 27, 2014

Out-of-commission Bitcoin exchange Mt Gox has been served with subpoenas for information on what action it took in response to recent cyber attacks, Reuters reported.

Manhattan U.S. Attorney Preet Bharara issued the subpoenas to Tokyo-based Mt Gox and other bitcoin-related exchanges and businesses after cyber pranksters exploited a flaw in bitcoin's software platform, known as "transaction malleability", which allowed duplicates to be made of thousands of transactions that had not been completed. The duplicates had to be examined by the exchanges to ensure the integrity of the system, and this led to a significant degradation of performance.

At least three exchanges suspended operations on 7 February, as their hubs were flooded with the ghost transactions in a DDoS-style attack.

On Monday Mt Gox CEO Mark Karpeles resigned from the board of the Bitcoin Foundation and his exchange continued suspension of transactions before going offline on Tuesday, leaving customers unable to recover their funds.

Karpeles sought to allay fears by stating on the company website: "As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues."

Bitcoin has no central bank or regulatory framework, both of which are associated with state-controlled currencies. Creating a unit of the currency relies on the ability to carry out computationally expensive mathematical operations, which leads to a limited supply of bitcoin.

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