Cyber currency Bitcoin is being walloped by attacks from unknown computer hackers who are sending "mutated" lines of code into the program that runs the virtual currency.
So far, the attacks have caused major headaches for the two Bitcoin exchanges that caused them to temporarily halt withdrawals by customers who stored bitcoins in digital wallets provided by the exchanges
According to a spokesperson for the Bitcoin Foundation, it appeared to be a denial-of-service attack.
"Whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming. The DoS attacks do not affect people's bitcoin wallets or funds."
The spokesman said a team of core software developers who focus on Bitcoin were working to fix the problem, but until it was solved some users would not be able to do anything with their Bitcoins, and the affected funds would appear to be "tied up" in transactions.
The only people who are being harmed are those who make multiple transactions in a short period.
The Slovenia-based Bitstamp became the second major Bitcoin exchange to halt customer withdrawals in the past several days, citing "inconsistent results," and blaming a denial-of-service attack.
That was a day after Mt. Gox, the best-known digital marketplace operator, said a halt on withdrawals would continue indefinitely. Traders reacted to the halt by sending the value of Bitcoin to its lowest in nearly two months.
It has not been a good week for Bitcoin with both the US, Canadian and Russian authorities ordering investigations into the currency. The Russians claim that Bitcoin breaks its laws and could be used for money laundering.
Canada said it will toughen rules targeting money laundering and terrorist financing to keep a closer eye on the use of virtual currencies.
New York's Department of Financial Services, expects to adopt consumer disclosure rules, capital requirements and a framework for permissible investments with consumer money.