|
 The bitcoin price varied dramatically from one exchange to another,
with Tokyo-based Mt. Gox, the best known operator of a bitcoin
digital marketplace, recording one of the biggest drops for the day.
On the Mt. Gox platform the currency plunged to as low as $500 early
on Monday, down more than 27 percent from Friday's final price of
$692, according to the Mt. Gox website. It last traded at $595.74,
off nearly 14 percent from Friday.
"This technical issue is of a much larger intensity than we've seen
in the past," said Sebastien Galy, currency strategist at Societe
Generale in New York. "The market may be realizing that there are
issues which are specific to these forms of currencies."
The bitcoin in recent months started to gain wider acceptance, with
Overstock.com and the Sacramento Kings basketball team both saying
they would begin to accept the currency.
More recently, the digital currency has drawn increased scrutiny.
New York state's top bank regulator in late January revealed plans
to regulate businesses handling transactions in bitcoin this year.
TRANSACTIONS COULD BE ALTERED
The bitcoin price started falling fast on Friday when Mt. Gox said
it was temporarily halting withdrawals due to unexplained technical
issues.
In an updated statement on Monday, Mt. Gox said withdrawals were on
hold indefinitely after it "has detected unusual activity on its
bitcoin wallets and performed investigations during the past weeks.
This confirmed the presence of transactions which need to be
examined more closely."
Mt. Gox said a "bug in the bitcoin software" could allow transaction
details to be altered.
In effect, someone on the network could alter transaction details to
make it appear a transfer of bitcoins from one digital wallet to
another had not occurred when in fact it had. This might cause the
transfer to be repeated.
A bitcoin wallet is an application that stores bitcoins for the
currency's users.
Mt. Gox said the issue was not limited to the exchange and "affects
all transactions where bitcoins are being sent to a third party." It
said the withdrawal suspension would be in effect until the issue
has been resolved.
[to top of second column] |
CoinDesk, which launched the CoinDesk Bitcoin Price Index in
September, removed Mt. Gox from its index Monday, citing its
"persistent failure to meet the index's standards for inclusion."
"These recent withdrawal restrictions are just the latest in a
series of issues which have made Mt. Gox's inclusion in the BPI
problematic," CoinDesk said.
On CoinDesk's bitcoin index, the bitcoin price was lower but not by
nearly as much as on the Mt. Gox platform. The CoinDesk index showed
bitcoin at $667.79 on late Monday afternoon, down about 5 percent
from Friday's close of $703.57. Its low for the day was around $540
versus $500 on Mt. Gox.
On both platforms, the price was still around the lowest since late
December. The price had topped $1,000 as recently as late January.
"With the volatility in the currency being as much as it is, it's
going to take some time before we get enough of a comfort level from
investors and merchants to enable it to be used ubiquitously," said
Darrin Peller, managing director at Barclays in New York.
The arrest of a prominent bitcoin advocate just over two weeks ago
threw a spotlight on the currency. Charlie Shrem, 24, operator of
the Bitinstant bitcoin exchange company, was charged by U.S.
prosecutors with conspiring to commit money laundering by helping to
funnel cash to illicit online drugs bazaar Silk Road. The following
day Shrem resigned as vice chairman of the Bitcoin Foundation, an
advocacy group.
(Reporting by Sam Forgione; editing by
Dan Burns and Leslie Adler)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
