Why Did Bitfloor Close? The 2012 Bitcoin Theft and 2013 Shutdown
The 2012 Bitcoin theft, 2013 bank-related shutdown and later customer disputes unfolded at different times. US court records explain what is known.
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Bitfloor suffered a theft of approximately 24,000 bitcoin in September 2012. Seven months later, the US Bitcoin exchange closed after losing its banking relationship.
The shutdown was not the end of the customer dispute. A May 15, 2020 federal court decision records a later claim that approximately $59,000 in customer dollar deposits could not be returned. Former customers also alleged they were unable to access Bitcoin balances.
Those are different claims involving different assets. The court did not determine that all customers had been paid.
Why did Bitfloor close?
Bitfloor was operated by Bitfloor Inc., led by Roman Shtylman. It was an early US venue for Bitcoin trading.
The company suffered a major security breach in 2012. Contemporary reporting recorded approximately 24,000 BTC stolen, valued at around $250,000 at the time.
According to the founder's account reported at the time, the attacker obtained wallet keys from an unencrypted backup. That explanation was a company account of the incident, not a finding about the hacker's identity.
Trading was interrupted after the breach. But the final closure in April 2013 had a different immediate trigger.
A subsequent federal court opinion recounts an April 19, 2013 shutdown announcement. Shtylman said the platform's US banking relationship had been terminated and Bitfloor could no longer offer dollar deposits and withdrawals as before.
In a later statement submitted to New York financial regulators, Shtylman said Bitfloor effectively ceased operations on April 21, 2013 after Capital One stopped providing services.
The loss of banking access, rather than a newly reported 2013 theft, was the reason given for the final shutdown.
What happened to the stolen Bitcoin?
The September 2012 loss of roughly 24,000 BTC was a historical incident. It should not be confused with later customer balances or dollar deposits.
The public court record does not establish that every stolen coin was recovered.
Customers later disagreed with the company's description of the wind-down.
In litigation, plaintiffs alleged they still had inaccessible Bitcoin in their Bitfloor wallets. The 2020 court decision records those allegations but did not decide that their disputed balances were either valid or repaid.
Bitfloor's founder presented a different account in a letter to the New York Department of Financial Services.
What did Bitfloor say it returned to customers?
The January 10, 2018 letter reproduced in the federal judgment said the company continued processing Bitcoin withdrawals and returning dollar deposits during its wind-down.
The founder claimed that approximately $59,000 in US dollar deposits could not be returned. He said the money had been held at the Internet Archive Federal Credit Union and was later forfeited to the US government after that institution closed.
That was Shtylman's explanation, not an independent court finding that every Bitcoin withdrawal succeeded or that the remaining dollar balances belonged to any particular plaintiffs.
The court also recorded a New York corporate dissolution dated August 31, 2016.
The sequence matters. Closing trading in 2013, winding down customer payments, and dissolving the corporation in 2016 were separate events.
Bitfloor closure and litigation timeline
| Date | Event |
|---|---|
| September 2012 | Bitfloor reported the theft of roughly 24,000 BTC and halted trading during the incident. |
| April 19, 2013 | A shutdown announcement was published after the exchange lost its banking relationship. |
| April 21, 2013 | Founder later identified this as the effective end of operations. |
| August 31, 2016 | New York records attached to the litigation showed corporate dissolution. |
| January 10, 2018 | Founder submitted an explanation to New York financial regulators, including the approximately $59,000 dollar-deposit figure. |
| May 15, 2020 | Federal court dismissed the commodities claim as time-barred and declined jurisdiction over remaining state-law claims. |
The 2018 letter does not establish a new withdrawal window. Nor does the 2020 decision establish a repayment program.
Did the 2020 lawsuit recover customers' funds?
Former Bitfloor customers sued Bitfloor Inc. and Shtylman in Wu v. Bitfloor Inc., a case in the US District Court for the Southern District of New York.
The plaintiffs alleged misrepresentations and omissions concerning Bitfloor's operation. They also alleged they could no longer reach cryptocurrency balances held on the exchange.
In the May 15, 2020 opinion, Judge Ronnie Abrams dismissed their federal Commodities Exchange Act claim because it was filed outside the applicable limitation period.
The court declined to exercise supplemental jurisdiction over the remaining state-law claims and dismissed those claims without prejudice.
The ruling was procedural. It was not a finding that customer funds had been fully returned, or a merits ruling establishing the plaintiffs' allegations.
The decision does not set out a general customer-compensation schedule, a current claims portal or an overall recovery percentage.
Can former Bitfloor customers still withdraw funds?
There is no verified active Bitfloor exchange withdrawal service or new public distribution program established by the court record reviewed for this article.
Former users should distinguish a historical company statement about wind-down payments from an available claim today.
For comparison, Mt. Gox creditors entered a court-supervised rehabilitation system with published trustee notices and deadlines. Bitfloor's documented aftermath is materially different.
The Cryptsy case involved court-appointed recovery actions and distributions, another outcome that should not be automatically applied to Bitfloor.
Why the Bitfloor case matters
Bitfloor's story illustrates two independent vulnerabilities: control of customer cryptocurrency and access to banking infrastructure.
The 2012 theft was a custody and security failure as reported by the company. The 2013 closure followed the breakdown of its banking relationship.
Neither risk disappears simply because cryptocurrency transactions run on a blockchain.
These differences are documented across Finlazo's closed crypto exchanges archive.
Readers considering buying crypto through a platform should check the current custody model, withdrawal arrangements and applicable terms. Finlazo does not recover assets previously held on Bitfloor.
