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Bitcoin Not Safe From Hackers, Prosecutors or Regulators

By Gabriella Khorasanee, JD | Last updated on

Bitcoin just won't stay out of the headlines. The most popular, and promising, virtual currency is in the news again -- but this time the news is not good. From technical glitches, talk of bit licenses and the first legal actions against Bitcoin vendors, this was not a good week for Bitcoin.

All of this comes on the heels of Bitcoin potentially gaining legal legitimacy; from congressional hearings, to the United States Postal Service considering getting in on the Bitcoin exchange action.

Here's the week in a nutshell.

Bitcoin Mt. Gox "Glitch"

Problems started surfacing when Mt. Gox, a Tokyo-based Bitcoin exchange suffered from some "glitches," and as a result temporarily halted customers from withdrawing Bitcoins "to an external address," reports Ars Technica. Once the glitch became public, hackers took advantage of the situation and bombarded two of the most popular Bitcoin exchanges -- Bitstamp and BTC-e -- with a denial of service attack, resulting in customers unable to get access to their funds, reports The Wall Street Journal.

New York Regulators

New York regulators also recently held hearings on Bitcoin and are the first state considering regulating the virtual currency, according to Reuters. Superintendent of New York's Department of Financial Services, Benjamin Lawsky, stated: "Our objective is to provide appropriate guard rails to protect consumers and root out money laundering without stifling beneficial innovation," reports Reuters. Countries including China, India and Russia are attempting to limit the use of, or ban entirely, the use of Bitcoin, reports Bloomberg, while Reuters includes Canada among those countries seeking to regulate virtual currencies.

Florida Law Enforcement Steps In

As if that were not enough, Florida has become the first state whose law enforcement officials have taken legal action against Bitcoin traders for violating state "laws against unlicensed money transmitters," reports Ars Technica, which according to the website comes "on the heels of the federal charges brought against the alleged CEO of BitInstant last month ... [for] plotting to sell $1 million work of Bitcoin to use on the Silk Road drug-selling website."

And that was just the Bitcoin news for this week. As with all commodities, tomorrow is another day -- the only question is will it dive or soar? Or, when it comes to Bitcoin, will it even be around at all?

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