It's All About the Bitcoins

Virtual Heist Paralyzes BitFloor, the U.S.’s #1 USD Bitcoin Exchange

24,000 more BTC fall into the hands of a cyberthief.
 Virtual Heist Paralyzes BitFloor, the U.S.s #1 USD Bitcoin Exchange

Mr. Shtylman (Photo: Twitter)

The problem with virtual currency is that it doesn’t take an Italian Job-style heist to make off with hundreds of thousands of dollars worth of Bitcoins. There’s no need for expert safe crackers, gun-wielding maniacs or limber laser dippers; despite the currency’s hardcore encryption, all you need is an Internet connection, a hacker and probably some Mountain Dew.

The relative ease and inexpensiveness of robbing a Bitcoin repository has most likely contributed to the rash of heists the virtual currency has endured since June 2011. Bitcoin has certainly seen its share of bad publicity. Over the last 15 months, more than 290,000 BTC have been stolen, according to CNET and Bitcoin talk forum.

A big heist on Monday night signaled the 10th since June, and was so damaging that it has shut down BTC exchange BitFloor, which–according to BitFloor founder Roman Shtylman–is the number one USD exchange in the U.S. (Mr. Shtylman says it also ranks number four worldwide.) The hacker successfully stole 24,000 BTC, which amounts to over $250,000 as of this writing.

In a Bitcoin Talk forum, spotted by CNET, Mr. Shtylman wrote:

Last night, a few of our servers were compromised. As a result, the attacker gained accesses to an unencrypted backup of the wallet keys (the actual keys live in an encrypted area). 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 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.

Mr. Shtylman is currently considering which path to pursue following the heist, but wrote that he doesn’t want “BitFloor to shutdown and cause more panic in the bitcoin community.” Still, the site is currently shuttered as the BitFloor team decides how to handle the loss. Wonder if Mark Wahlberg is available to lend his assistance.

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