After $250,000 theft, Bitcoin exchange Bitfloor reopens

After $250,000 theft, Bitcoin exchange Bitfloor reopens

Early in the month, we reported that the top US Bitcoin exchange, Bitfloor, had a security breach that resulted in a theft of Bitcoins worth $250,000. At the time it was very much up in the air as to whether Bitfloor would be able to resume operation, but today it has announced that it is back in business.

Founder and operator Roman Shtylman took to Google+ to make the announcement, although the pre-theft funds are still frozen. New deposits will be accessible as normal. “As funds are available for repayment, they will be dispersed on a pro-rated basis,” said Shtylman.

“Bitcoin funds for repayment will be purchased using revenue from fees. This will ensure that as Bitfloor grows I am able to continue operation to recover the stolen funds over time.”

Bitfloor is also pursuing investment opportunities to recover funds for its customers more quickly.

Shtylman has made a number of security improvements to the exchange to prevent a similar theft occurring. Client funds will be put into cold storage — stored on a computer that is not networked — while a hot wallet will cover daily transactions, ensuring that if someone does gain access again, no customer deposits are at risk.

A new passphrase system is being employed and the system is now being run from a PCI compliant data center in the US. Notably, Shtylman also notes that backups will be encrypted and write-only on all servers — an unencrypted backup enabled the theft after hackers gained access to the server last time.

Shtylman does reiterate that USD balances, ACH withdrawals, cash deposits and wire transfers were never affected and continue to be processed.

Despite a number of high-profile setbacks, Bitcoin growth continues unencumbered, and the decades to come will be very interesting as one of society’s oldest tools — currency — is disrupted.

Image Credit: Zach Copley

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