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Cyberattack temporarily hits bitcoin exchange Bitfinex

  • Major digital currency exchange Bitfinex reported a distributed denial-of-service attack that temporarily took the system offline Monday.
  • Bitcoin dipped below $11,000, but within an hour, Bitfinex tweeted that operations were returning to normal.
  • The latest technical difficulties followed several cyberattacks on digital currency exchanges in June, including Bitfinex.
Photo illustration of Bitfinex cryptocurrency exchange website taken September 27, 2017.
Dado Ruvic | Illustration | Reuters
Photo illustration of Bitfinex cryptocurrency exchange website taken September 27, 2017.

Bitcoin briefly fell below $11,000 Monday as one of the world's largest digital currency exchanges reported a temporary outage due to a cyberattack.

Bitfinex tweeted at 7:39 a.m. ET that " Platform is currently under heavy load and we are working to bring it back online."

"The cause is a DDoS attack. A person or group is intentionally trying to cause the platform to not operate normally," the exchange said. A DDoS, or distributed denial-of-service attack, attempts to paralyze a system with a flood of information.

But within an hour, Bitfinex tweeted that operations were returning to normal.

Bitcoin traded about 1 percent higher, near $11,325, Monday, according to CoinDesk, after Cboe announced it will launch bitcoin futures trading on Sunday. The digital currency rebounded 31 percent from last week's low to a record high of $11,831.51 Sunday, according to CoinDesk.

Hong Kong-based Bitfinex was the top exchange for U.S. dollar-bitcoin trading by trading volume, but last week it was surpassed by San Francisco-based Coinbase, according to CryptoCompare. Bitfinex ended services for U.S. customers in early November, citing high costs of dealing with U.S. regulation.

Digital currency exchanges have struggled to keep up with surging interest in cryptocurrency trading.

"All the exchanges are adding users at a torrid pace and people are expecting continued adoption growth," Spencer Bogart, managing director and head of research at Blockchain Capital, said in an email.

With bitcoin holding above $10,000, "it's hard not to take it seriously at this point," Bogart said. "I've seen many people that have been on the sidelines decide that the move over $10K was a key moment and, for some reason, the high price gives them more conviction in the longevity of bitcoin as an asset."

Bitcoin surged above $9,000 the weekend after Thanksgiving, helped by an addition of an estimated 300,000 new customers at Coinbase, the leading U.S. platform for buying and selling bitcoin. Bitcoin then went on to top $10,000 after a major digital currency conference in New York and rose above $11,000 Wednesday morning.

But in a few hours, bitcoin plunged more than $1,000 after Coinbase reported record-high traffic and its services were temporarily unavailable for some customers. Coinbase's GDAX exchange also reported "performance issues and downtime" before resolving them that afternoon.

In June, hackers targeted Bitfinex and other digital currency exchanges as bitcoin rallied. Bitfinex also suspended trading in August 2016 after a hack resulted in the theft of nearly 120,000 bitcoins.

As the world watches bitcoin's price surge and major derivatives exchanges launch bitcoin futures, digital currency exchange security will grow increasingly important.

Correction: This story has been updated to reflect that in June, Coinbase struggled to handle high traffic.