Following Friday “Flash Crash”, Huobi Site Down as It Fends Against DDOS Attacks

UPDATE: the site is back online and trades appear to be executing.

Huobi, claimed to be the world’s largest Bitcoin exchange by volume, appears to be down due to “maintenance” to fend off “a large number of DDOS attacks”.

The homepage immediately redirects to the warning. Trading and all site functions are unavailable.

The warning states that all should return to normal by 15:00. As of 17:00 China Standard Time (CST), the site is still down.

Bitcoin (BTC) remains at 3475 yuan on Huobi, or $558, diverging from the $565 found on other major exchanges.

For Huobi, the last week has been one of when it rains, it pours. Earlier last week, they launched Litecoin trading. Litecoin prices underwent an enormous and in span of 48 hours as hype quickly built up in anticipation for LTC’s addition to Huobi, followed by its crash back to earth.

On Friday, Bitcoin on Huobi took a reverse course: it crashed by 14% from 3700 to 3200, only to immediately reverse course almost all the way back to par. On OKCoin, BTC swung by double the magnitude, bottoming at 2653, or a loss of 30%. The “flash crash” seemed to have resulted from a rumor on Weibo that China’s central bank issued a document asking all Bitcoin transactions to cease by April 15. The Weibo was forwarded to Sino Financial Report, one of the biggest news agencies in China, without confirmation, and from there to a large number of readers. The Sina news feed was later edited to have a vaguer tone and then removed altogether.

So rapid was the rumor and its “retraction” that USD-based exchanges barely had time to react at all, with BTC-e and Bitstamp losing no more than 7% during the period.

Since the event, Bitcoin prices have followed a gradual downtrend, trading well below $600, their lowest levels since MtGox’s was becoming a reality.

The “flash crash” is reminiscent to the one observed in equity markets on May 6, 2010, when the Dow Jones Industrial Average crashed by over 1000 points (9%) and recovered in a matter of minutes. There, an abnormally large sell order triggered a sell-off exaggerated by high frequency traders looking to capitalize.

It has not been confirmed if the flash crash and today’s outage are linked in any way. In theory, one can speculate that the abnormally high volume and severe price movements exposed a vulnerability to potential hackers not previously observed.