BitCoin exchange loses $250,0000 after unencrypted keys stolen
BitFloor's founder wrote that he failed to encrypt a digital wallet containing the secret encryption keys
Hackers stole about $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 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.