Mt Gox Halts Bitcoin Transfers to Implement Short-Term Fix to Transaction Malleability Issue

Tokyo-based bitcoin exchange Mt Gox said its website will be down for about six hours as part of its implementation of a solution to the "transaction malleability" issue.

The downtime will affect all bitcoin deposits and internal bitcoin transfers in addition to the current pause on bitcoin withdrawals, Mt Gox said. Trading in the virtual currency will be open as usual.

The downtime is from 6pm to 12 am Japanese Standard Time. However, the downtime period is approximate, according to the exchange that said it may shorten or lengthen the period as required.

"Once the implementation is complete customers will again be able to deposit bitcoin, but we will be doing extensive testing before bitcoin withdrawals are reactivated," the exchange said.

"Our solution should work in the short term, while a longer-term solution is being discussed with the Bitcoin Core Dev team and the Bitcoin Foundation. We are also discussing this with other exchanges and businesses. "

Transaction Malleability Issue

Earlier, Mt Gox suspended withdrawals from its exchange claiming bitcoin's inability to handle the volume of traffic Mt Gox customers create was the problem.

It added that an inherent flaw with the way bitcoin transactions work had slowed its services to a crawl, and a temporary ban on withdrawals was needed to rectify the situation.

The development resulted in a plunge in bitcoin rates across the globe.

The issue known as "transaction malleability" allows hackers to mask the transaction ID and continually ask an account to deposit more bitcoins.

Also, several high profile bitcoin exchanges including BitStamp were forced to suspend withdrawals following "massive and concerted" DDoS attacks on their networks.

Hackers made use of the same vulnerability to attack underground drugs website Silk Road 2 and to steal the website's entire cache of bitcoin worth $2.7m (£1.6m, €2m).

Silk Road 2's operator, known as Defcon, reported the website was hacked using a transaction malleability exploit and 4474.26 bitcoins were stolen, emptying the site's escrow account.

Silk Road 2.0 was set up in the wake of the FBI closing down the original Silk Road last year, which was also only available on the anonymous Tor network. The only currency accepted on Silk Road 2 is bitcoin.