The value of peer-to-peer virtual currency Bitcoin has plummeted after an account at MT. Gox, an exchange for the digital money, was compromised and a large amount of coins sold off.
The value of Bitcoin fell from $17.5 to pennies within minutes on MT. Gox, which quickly suspended trading and issued a statement.
The company says a single account with a lot of coins in it was compromised by someone using a Hong Kong-based IP to login. The perpetrator sold all the currency and then immediately bought it all back and then attempted to withdraw it, although the account had a $1000 a day withdrawal limit so the thief could not get it all.
Later, MT. Gox confirmed that a compromised computer led to its database being pulled, exposing the usernames, e-mail addresses and hashed passwords for thousands of users.
It is now advising people to change their passwords if they are "simple" and predicting the exchange will be back up and running by 02.00 GMT.
According to ars technica, the currency crash is specific to MT. Gox, with another exchange, Tradehill, experiencing a far less severe drop in the value of coins.
The MT. Gox meltdown comes in the wake of a warning last week from security outfit Symantic that Bitcoin has been targeted by crooks that have developed a Trojan designed to locate users' wallet.dat file and email it to the attacker.
In a blog, the company's Stephen Dohertyv advises users: "If you use Bitcoins, you have the option to encrypt your wallet and we recommend that you choose a strong password for this in the event that an attacker is attempting to brute-force your wallet open."
Although it has been running for around two years, Bitcoin has begun attracting attention in recent months as its value and popularity rise. It has also come under scrutiny from US senators worried it is being used to anonymously buy illegal drugs online.