Bitcoin exchange BitFloor shuttered after virtual heist

Nearly a quarter million dollars worth of the peer-to-peer currency was stolen by accessing unencrypted backup wallet keys.

Bitcoin exchange BitFloor has shut down operations while it investigates the theft of nearly a quarter million dollars' worth of the virtual currency.

The heist occurred last night when an attacker accessed an unencrypted backup of wallet keys and made off with 24,000 BTC. This led BitFloor founder Roman Shtylman to suspend the exchange's operations. As of this writing, a Bitcoin is worth $10.40, making the heist's haul worth $249,600, according to Bitcoin converter Preev.

Shtylman revealed the break-in today in a Bitcoin Forum post that pleaded for Bitcoin users' help in resurrecting the exchange:

Using these keys they were able to transfer the coins. This attack took the vast majority of the coins BitFloor was holding on hand. As a result, I have paused all exchange operations. Even tho [sic] only a small majority of the coins are ever in use at any time, I felt it inappropriate to continue operating not having the capability to cover all account balances for BTC at the time.

Forced to shut down BitFloor, Shtylman said he has initiated account repayment using funds on hand based on his record books, which he said were unaffected by the breach.

"I still have all of the logs for accounts, trades, transfers," he wrote. "I know exactly how much each user currently has in their account for both USD and BTC."

Shtylman said he is evaluating options for the exchange but that he was trying to avoid causing more panic in the Bitcoin community.

"Through exchange user support, I can continue to operate BitFloor," he wrote. "I believe that posting the exchange source and being even more transparent about operations would be a step in this direction if we were to continue operating."

Bitcoin sprang up in 2009 as a peer-to-peer currency that intentionally avoided the prying eyes of law enforcement officials. In order to acquire Bitcoins, users access exchange sites to transfer actual currency, such as U.S. dollars, into the digital option.

However, the platform has been the target of frequent thefts, hacks, and scams, with more than 290,000 BTC lost in 10 heists since June 2011, according to tallies on the BitcoinTalk forum.

Last month, users of Bitcoin exchange Bitcoinica filed a complaint against the trading platform in a San Francisco court, alleging the loss of $460,000 due to poor security and deceitful practices.

 

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