said by BosstonesOwn:
You all missed the obvious ! Safe Storage was not so safe !
Well at least with 500 megs we can say it really wasn't much for them to lose
The way I understand it the use of 'safe' within this context is to provide data resiliency not data security, who cares is some hacker got hold of your Grandmother's Christmas pictures.
But you are right this should have never happened and passwords should have been salted, hashed and placed in a different server.