The Bitfloor Heist
Bitfloor, the fourth largest US exchange, is hacked for 24,000 BTC due to unencrypted backups.
On September 4, 2012, Roman Shtylman, the operator of the New York-based exchange Bitfloor, announced that the platform had been compromised, resulting in the theft of 24,000 BTC (worth approximately $250,000 at the time). Bitfloor was a critical hub for US liquidity, often serving as the primary alternative for traders who wanted to avoid the international wire delays associated with Mt. Gox. The hack was a devastating blow to the American market infrastructure.
The breach was a textbook example of poor operational security, contrasting sharply with the protocol-level security of Bitcoin itself. Shtylman revealed that the attackers had accessed an unencrypted backup of the wallet keys that had been carelessly left on a server. This allowed them to simply sweep the funds without needing to break any encryption. The incident sent shockwaves through the community, reinforcing the "Not Your Keys, Not Your Coins" mantra. While Bitfloor attempted to restart operations and repay users, it never fully recovered and eventually shut down permanently in April 2013 due to banking closures.