BitStamp's bitcoin "breach" results in loss of $5.4M BitStamp, which runs the world's third largest bitcoin exchange, announced on Tuesday that $5.4 million worth of the cyber currency had been lost to a security "breach."

Kaja Whitehouse | USA TODAY

CORRECTION: A previous version of this story inaccurately referenced the bitcoin exchange rate.

BitStamp, which runs the world's third largest bitcoin exchange, announced on Tuesday that $5.4 million worth of the cyber currency had been lost to a security "breach."

The Slovenia-based firm suspended operations after reporting the breach on Monday. On Tuesday, the company said operations were still suspended and that fewer than 19,000 bitcoins had been lost.

The breach couldn't come at a worse time for bitcoin enthusiasts who have seen the cyber currency bashed as the worst investment of 2014 amid massive drops that have more than halved the value of the digital coin.

But experts say bitcoin — and BitStamp — can survive the breach if the damages are contained, which BitStamp has promised to be the case.

"They [BitStamp] got hit but it looks like they will be able to survive the hit," said Steve Lord, founder of Modern Money Group, which focuses on bitcoins. "I would never characterize this as immaterial, but I certainly don't think its the death knell you are reading about."

Indeed, BitStamp on Tuesday sought to diminish the impact of the breach on its business, saying the lost cyber coins represent "a small fraction of Bitstamp's total bitcoin reserves." The remaining bitcoins are "held in secure offline cold storage systems," BitStamp said.

BitStamp reported its reserves to be worth 183,497 bitcoins in May, according to ZDNet, a tech web site. But the link to the original report could not be accessed on Tuesday.

The bitcoin operator also promised to make burned customers whole, saying it has enough funding to cover the loss.

"We would like to reassure all Bitstamp customers that their balances held prior to our temporary suspension of services will not be affected and will be honored in full," the company said in a statement on its web site.

Bitcoin investors have been skittish since the world's largest bitcoin exchange, Mt. Gox, collapse last year after hackers allegedly stole 850,000 bitcoin, worth close to $450 million. The Japan-based exchange has since been accused of mishandling customers' accounts, leading to investigations in both Japan and the US.

Bitcoin ended 2014 at $319.70 per bitcoin, down a whopping 58 percent from $770.43 for every bitcoin at the start of the year, according to data tracker CoinBase.

By contrast, crude prices are down 55 percent since June, before the sell-off that is currently rattling stock markets.

On Tuesday, the currency traded even lower at $285.67 per bitcoin.