January 8, 2015 By Bob Violino 2 min read

European bitcoin exchange Bitstamp temporarily suspended its trading services on Monday after one of its operational bitcoin storage wallets was compromised the day before and cybercriminals made off with about $5 million worth of virtual currency.

The operational wallets are linked to the Internet and let customers instantly exchange the virtual currency. The company said in a prepared statement on its website that customers’ bitcoins held before services were suspended are safe and will be fully honored. Bitstamp is one of the largest bitcoin exchanges in the world and has provided bitcoin service to customers since August 2011.

Upon learning of the breach, Bitstamp said it immediately notified all customers that they should no longer make deposits to previously issued bitcoin deposit addresses. As an additional security measure, Bitstamp suspended its systems in order to fully investigate the incident and is actively engaged with law enforcement officials to track down the culprits.

This breach represents only a small portion of Bitstamp’s total bitcoin reserves, the “overwhelming majority” of which are held in secure, offline cold storage systems. Bitstamp maintains only a small fraction of customer bitcoins online to prevent compromises, and it said it maintains more than enough offline reserves to cover the bitcoins that were compromised.

The company is working to transfer a secure backup of the Bitstamp site onto a new, safer environment and will bring this site online in the coming days. To keep its customers apprised of the situation, Bitstamp plans to continue posting updates on its website, on Twitter and through its customer support page.

In a tweet posted on Tuesday, Bitstamp Co-founder and CEO Nejc Kodrič wrote, “Our redeployment is up internally and is being filled with backup data for testing.” He said a relaunch was expected within about 24 to 48 hours. He later issued a post on Twitter to personally reassure clients that their balances held with the bitcoin exchange were safe and will be honored in full.

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