BitFloor's founder wrote that he failed to encrypt a digital wallet containing the secret encryption keys Hackers stole about US$250,000 from BitFloor, a BitCoin exchange, on Monday, and it does not have the money to reimburse account holders, according to the website’s founder. BitCoins are an electronic currency that are generated as computers solve a changing mathematical problem. A BitCoin is essentially just a secret number, which is protected from unauthorized transfers by public key cryptography, that is associated with an 34-character alphanumeric “address” that a user holds.BitFloor, based in New York City, allowed account holders to buy and sell BitCoins, exchange the currency for U.S. dollars and transfer the money using the ACH (Automated Clearing House) system.The cryptography wrapped around BitCoins is designed to make it nearly impossible to derive the private keys needed to gain possession of the secret number. But in the case of BitFloor, hackers found the keys. Roman Shtylman, BitFloor’s founder, wrote on a forum that the hackers obtained an unencrypted backup of the keys, which were then used to transfer coins held by BitFloor. The backup “was made when I manually did an upgrade and was put in the unencrypted area on disk,” he wrote.“I realize the details of the failure and attack are interesting but I am currently focused on user accounts and exchange status going forward,” he wrote. BitFloor’s reserve of BitCoins — about 24,000 — was wiped out. A BitCoin was worth about $10.46 as of Wednesday, according to Mt. Gox, another BitCoin exchange.U.S. dollar accounts with BitFloor were not affected as well as records for accounts and trades, Shtylman wrote. BitFloor turned over around 64,000 BitCoins a month, worth some $717,000. It took a 0.3 percent commission from trades, amounting to around $2,100 in revenue for the site, Shtylman wrote.“As a last resort, I will be forced to fully shut BitFloor down and initiate account repayment using current available funds,” Shtylman wrote. “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 [BitCoin]. No records were lost in this attack.”One user asked if BitFloor could secure some investor funds in order to pay back customers. “This would be a possibility if investors interested in helping continue operations show interest,” Shtylman wrote. “It is certainly something I am thinking about.”Send news tips and comments to jeremy_kirk@idg.com Related content news analysis DHS unveils one common platform for reporting cyber incidents Ahead of CISA cyber incident reporting regulations, DHS issued a report on harmonizing 52 cyber incident reporting requirements, presenting a model common reporting platform that could encompass them all. By Cynthia Brumfield Sep 25, 2023 10 mins Regulation Regulation Regulation news Chinese state actors behind espionage attacks on Southeast Asian government The distinct groups of activities formed three different clusters, each attributed to a specific APT group. By Shweta Sharma Sep 25, 2023 4 mins Advanced Persistent Threats Cyberattacks feature How to pick the best endpoint detection and response solution EDR software has emerged as one of the preeminent tools in the CISO’s arsenal. Here’s what to look for and what to avoid when choosing EDR software. By Linda Rosencrance Sep 25, 2023 10 mins Intrusion Detection Software Security Monitoring Software Data and Information Security feature Top cybersecurity M&A deals for 2023 Fears of recession, rising interest rates, mass tech layoffs, and conservative spending trends are likely to make dealmakers cautious, but an ever-increasing need to defend against bigger and faster attacks will likely keep M&A activity steady in By CSO Staff Sep 22, 2023 24 mins Mergers and Acquisitions Data and Information Security IT Leadership Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe