Bitcoin exchange Bitstamp loses millions of dollars in security breach

Bitstamp, Bitcoin's third busiest exchange in the world, experienced a security breach on Sunday. The breach lead to the loss of about 19,000 bitcoins, which amounts to about $5 million dollars in digital currency.

Bitcoin is currently the world's best-known virtual currency, which is not backed or regulated by any government. Bitcoins began circulating in the marketplace in 2009.

Bitstamp, based in the UK and Slovenia, reported that only a small percentage of the exchange's overall bitcoin reserve was compromised, since most of the funds are held in secure offline accounts that are inaccessible to hackers.

However, the firm did halt all withdrawals and is advising clients not to make any more deposits until the exchange has completed its investigation into the incident. Bitstamp's site was shut down on Monday, immediately after officials learned of the data breach, and the site has not yet been made active again.

"We would like to reassure all Bitstamp customers that their balances held prior to our temporary suspension of services will not be affected and will be honored in full," said the exchange in a statement to its customers.

Bitstamp also reported that it would "actively engage with law enforcement officials" in any investigations regarding the breach.

Cybercriminals apparently hacked into the firm's 'operational wallets' that were connected to the internet and contained bitcoins actively being traded.

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