Bitstamp, the largest Bitcoin exchange, has informed its users that it has temporarily stopped processing withdrawals after suffering a denial-of-service attack, TechCrunch reported. Bitstamp assured users that the balances are intact and all customer funds are secure.

In a statement on its website, Bitstamp said, "This is a denial-of-service attack made possible by some misunderstandings in Bitcoin wallet implementations. These misunderstandings have simple solutions that are being implemented as we speak, and we're confident everything will be back to normal shortly." The statement added that they will be cancelling the failed withdrawals on February 10-11 and giving back the amounts to customer accounts.

TechCrunch reported that the attack did not come as a surprise given the growing popularity of Bitcoin and the rising importance that it has on the trading of the digital currency. The value found in Bitstamp and other exchanges makes them clear targets. Compared to the Mt. Gox exchange where the Bitcoin trades at about $575, Bitstamp gives Bitcoin a much high price of $655, the report said.

It can be recalled that Mt. Gox also recently stopped withdrawals from users' accounts because of a transaction malleability problem. Mt. Gox explained the issue this way in a statement on its website when they halted trading, "A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent."

According to Bitstamp, transaction malleability was also used in their situation "to temporarily disrupt balance checking."

The TechCrunch report said that the stoppages should not be taken lightly. "Bitstamp is the largest Bitcoin exchange, and Mt.Gox is the third largest. This makes the halting of withdrawals at the two non-trivial, given the action's inherent disruption of the nascent Bitcoin economy," the report said.