Bitfloor Exchange Hack

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It’s reported that "the attacker gained accesses to an unencrypted backup of the wallet keys (the actual keys live in an encrypted area)." It’s unclear from the forum discussion if a proper wallet structure was used, however it was definitely not multi-sig, and obviously none of it was insured. None of the customers were able to retrieve any of their funds in the end.

This exchange or platform is based in United States, or the incident targeted people primarily in United States.

About BitFloor

“Leading U.S. Bitcoin exchange Bitfloor was breached in September of 2012, losing over 24,000 BTC during the incident. Bitfloor explained at the time that the exchange’s hot wallet data was mistakenly held on the company’s servers which led to the hack. No bitcoins were returned to customers after the hack even though the company resumed trading and promised restitution. “As funds are available for repayment, they will be dispersed on a pro-rated basis,” explained Bitfloor’s founder and operator Roman Shtylman. However, according to the company, Bitfloor’s banks had ceased doing business with the startup and customers never saw their funds again.” “It all started when the exchange’s server crashed, either under the influence of a DDoS-attack or because of a power outage in the data center — as was claimed by its owner Roman Shtylman.” “Four days after, the hackers used a backup copy of the key from the hot wallet of the exchange, where the funds of traders were stored, and withdrew 24,000 BTC. Shtilman made an unsuccessful attempt to compensate the victims by selling a stake in BitFloor's property, but could not find an interested party. In 2013, the exchange closed, leaving the affected investors with nothing.”

This exchange or platform is based in United States, or the incident targeted people primarily in United States.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Bitfloor Exchange Hack

Date	Event	Description
September 1st, 2012 12:00:13 AM MDT	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost has been estimated at $240,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

Coming soon.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.