Bitcoin Plunges After Mt. Gox Blocks Withdrawals

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The price of Bitcoin dropped sharply today after Mt. Gox announced that it was temporarily halting Bitcoin withdrawals on its trading platform.

For months now, some Mt. Gox users have found it difficult to withdraw funds from their accounts; the withdrawal freeze will help Mt. Gox's team get to the root of the problem, the exchange said.

Mt. Gox, which is based in Tokyo, is the world's third-largest Bitcoin exchange by recent trading volume. For years it was the No. 1 exchange, but BTC China took the top spot last fall, riding a huge wave of Asian interest in digital currencies. Since the Chinese government forbid banks and payment processors from handling bitcoins this past December, however, BTC China has fallen to fourth place.

Related: How the World's Richest Nations Are Regulating Bitcoin

The price of Bitcoin plummeted following the news. According to the Bitcoin Price Index, which provides an average of bitcoin prices across top exchanges around the world, the cryptocurrency has dropped about $61 since today's open of $784, losing nearly 8 percent of its exchange value relative to the U.S. dollar.

The value of Bitcoin often varies slightly from one exchange to another. At 10:47 a.m. EST, the price of a single bitcoin was $716 on BitStamp, $718 on BTC-e and $725 on Mt. Gox. These are currently the top three Bitcoin exchanges in the world.

An increased number of withdrawal requests "has hindered our efforts on a technical level," Mt. Gox said in a statement. "In order for our team to resolve the withdrawal issue it is necessary for a temporarily pause on all withdrawal requests to obtain a clear technical view of the current processes."

Withdrawals are being returned to user wallets "and can be reinitiated once the issue is resolved," the exchange added.

Mt. Gox said its team would be working on the problem through the weekend and would provide an update on Monday, Feb. 10.

Related: PayPal Is Cracking Down on Bitcoin Sellers

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