Bitcoin exchange shuts down after possible hack

The overseas-based bitcoin exchange Bitstamp shut itself down Monday because of a possible security breach, according to the site’s homepage.

The company said it has “reason to believe” it was hacked on Sunday.

{mosads}“In an excess of caution, we are suspending service as we continue to investigate,” the exchange said. “We will return to service and amend our security measures as appropriate.”

Regulators have expressed concerns over the security of bitcoin, a digital currency that can be used at a growing number of retailers or exchanged for physical currency. Another top bitcoin exchange, Mt. Gox, went bankrupt last year after losing $475 million bitcoins to a possible hack. It was the Internet’s top bitcoin exchange at the time.

Bitstamp, which accounts for roughly 6 percent of bitcoin transactions, said similar damages were unlikely.

“As a security precaution against compromises Bitstamp only maintains a small fraction of customer bitcoins in online systems,” said the United Kingdom and Slovenia-based exchange. “Bitstamp maintains more than enough offline reserves to cover the compromised bitcoins.”

Federal regulators could move this year on enhanced digital currency regulations.

The Consumer Financial Protection Bureau has called virtual currencies the “Wild West” of the financial markets, and the Senate Homeland Security and Governmental Affairs Committee is expected to release a report this spring on the quickly spreading currency.

Sen. Joe Manchin (D-W.Va.) has even pushed for a possible ban on the currency citing its illegal transactions and volatility. Bitcoin transfers can be largely anonymous, and the currency’s price has been known to swing dramatically.

“The clear ends of bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use,” Manchin wrote last year in a letter to Treasury Secretary Jack Lew.

On Twitter, Bitstamp head Nejc Kodric reached out to the exchange’s users: “My sincerest apologies to those who are affected by our service being temporary suspended.”

Kodric later said the company hopes to have an estimated timeline for restoring its service by Monday afternoon.