The slip up was discovered during a routine security review early this year.
Our login systems are designed to mask passwords using techniques that make them unreadable.
However, it is not known for what purpose.
Apparently, Facebook employees built applications that logged unencrypted password data that in turn exposed the passwords.
However, the company has no plans to reset those users passwords.
Source:Krebs,Facebook
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source: www.techworm.net