BitFloor Suspends Service After Virtual Currency Heist

Type threatpost
Reporter Anne Saita
Modified 2013-04-17T16:31:36


BitcoinThe founder of the largest U.S.-based BitCoin exchange has suspended operations after attackers broke into a server and stole $250,000 worth of the virtual currency.

BitFloor founder Roman Shtylman announced yesterday that he had halted operations while evaluating future steps following the breach that amounted to some 24,000 stolen Bitcoins, which amounted to the vast majority of coins BitFloor had on hand. The heist happened while Shtylman was doing a backup that left a copy of wallet keys in an unencrypted area of the server’s hard drive.

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“Due to the serious nature of what has happened I am currently evaluating options for BitFloor,” he wrote in a BitFloor Forum on Tuesday. “One of the last things I want to happen is for BitFloor to shutdown and cause more panic in the bitcoin community. The platform itself is very valuable and provides an important and friendly service to many users.”

He later added, “As a last resort, I will be forced to fully shut BitFloor down and initiate account repayment using current available funds. I still have all of the logs for accounts, trades, transfers. I know exactly how much each user currently has in their account for both USD and BTC. No records were lost in this attack.”

The prospects of finding the attackers are remote, given the intentionally anonymous nature of BitCoin exchanges. Such anonymity has made BitCoin exchanges a target for attacks and also raised concern about criminal transactions. This spring the FBI released a report warning that the decentralized, P2P structure “provides a venue for individuals to generate, transfer, launder and steal illicit funds with some anonymity.”

That assessment issued April 24 also stated that “even though there is no central Bitcoin server to compromise, the FBI assesses with high confidence, based on reliable industry and FBI reporting, that criminals intending to steal bitcoins can target and exploit third-party bitcoin services and an individual’s Bitcoin wallet.”

CNET said in a published report this week that more than 290,000 Bitcoins have been swiped in heists during the past 15 months. Hackers are increasingly using malware to steal the virtual currency and cash in.