Tokyo-based Mt. Gox, the world’s biggest Bitcoin exchange, says it’s been hit by a major DDoS attack that’s causing lengthy trading lags, 502 errors, and in some cases, preventing people from logging into their accounts. The news follows a hack of Bitcoin wallet site Instawallet earlier this week, which precipitated an indefinite suspension of its service.
A successful attack on its systems is an easy way to propagate uncertainty
On its Facebook page, Mt. Gox does its best to guess at the attackers’ motives. The exchange points out that Bitcoin has hit a record high of $142 over the past few days, and that instability drives prices down. Since Mt. Gox handles between 70 and 80 percent of Bitcoin trades, a successful attack on its systems is an easy way to propagate uncertainty in the market — people panic and sell, you can buy while prices are low, wash, rinse, repeat.
As far as preventing the attacks, Mt. Gox says there isn’t much it can do other than disconnect the trade engine backend from the internet, a partial fix that would allow selected users to continue to trade even if the site were hit with another DDoS attack. Mt. Gox's marketing manager, Gonzague Gay-Bouchery tells us that "some partners" would "have the possibility to get a direct connection to our data center to access our trade engine," which he describes as similar to solutions implemented by major exchanges like Nasdaq. "This will of course not solve the DDoS problem or lag that you may see if someone is targeting us," he explains, "but for these partners and users using them their trades will not be affected."
Despite Bitcoin’s incredible rise in value over the past several months, the digital currency has suffered its share of setbacks. Last month, Mt. Gox suspended deposits after a technical problem prevented some versions of the software from recognizing a newly-minted block of coins.