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Bitcoin plummets 20% after major exchange halts withdrawals

Friday, 7 Feb 2014 | 6:49 AM ET
Bitcoin plunges on exchange suspension
Friday, 7 Feb 2014 | 11:38 AM ET
Bitcoin exchange Mt. Gox suspended all bitcoin withdraws due to a technical issue, reports CNBC's Sara Eisen.

Virtual currency bitcoin lost nearly twenty percent of its value on Thursday evening, after major exchange Mt Gox halted withdrawals to try to resolve ongoing technical issues.

The digital currency — which is known for its wild price fluctuations — was trading at $680.52 on Friday morning, having traded around $850 for most of the week, according to CoinDesk, which tracks the price of bitcoin.

(Track the price of bitcoin here)

Mt Gox told customers that in a effort to resolve an issue with withdrawals, the system needed to be in a static state.

Source: Mtgox.com

"In order for our team to resolve the withdrawal issue, it is necessary for a temporary pause on all withdrawal requests, to obtain a clear technical view of the current processes," Mt Gox said on its website on Friday morning.

"We apologize for the sudden short notice. All bitcoin withdrawal requests will be on pause, and the withdrawals in the system will be returned to your Mt Gox wallet, and can be reinitiated once the issue is resolved."

(Read More: Bitcoin back: Major exchange resumes yuan trading)

Perseus 'modified' business model for bitcoin: CEO
Jock Percy, CEO of Perseus, explains how the company "modified" its business model to "manage volatility" and accept payments in bitcoin.

An update from the Japan-based company is due on February 10.

Mt Gox is the third-biggest bitcoin exchange in the world, representing around 14 percent of total bitcoin trade in the last week, according to Bitcoinity.org.

However, it has recently experienced lengthy delays when exchanging bitcoin into U.S. dollars. It has also suffered a series of public relations disasters, including when the U.S. Department of Homeland Security seized its bank account in May 2013, saying it had never property registered as a money services company.

Customers took to social media this Thursday to express their dissatisfaction about the latest halt to trade, but reminisced about Mt Gox's pioneering service during the fledgling days of bitcoin.

(Read more: Bitcoin crashes 20% on China clampdown fears)

Bitcoin is a "virtual" currency that allows users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining. Some 12 million bitcoins are believed to be in circulation, with a cap of 21 million — meaning no more bitcoins can be created after that point.

By CNBC.com's Matt Clinch; Follow him on Twitter @mattclinch81

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