Basically, you acted in a completely inappropriate and unprofessional manner with one of your clients, whatever your motivation. It sounds like oDesk is exercising its rights under your contract to hold the remaining funds in escrow until it is certain that there won't be similar problems with any of your other clients. You've put them in the position of having to contact your past clients, inform them of a possible security problem and that they should change their passwords (and possibly check for back doors), and deal with the associated business reputation issues they will suffer. You have contractually provided them with the right to put a hold on your funds while these issues are investigated and resolved. Once they are resolved, to the extent that the resolution is in your favor you should get the balance of your earnings.
Quote Quoting 1.4 Acknowledgement of oDesk's Interest in Proper Performance of Service Contracts.
User acknowledges and agrees that the reputation and goodwill of oDesk may be adversely affected if, as an Employer or Contractor, the User engages in violations of the Service Contract. oDesk has the right to take action, including legal action, against the User as oDesk, in its sole discretion, deems necessary to protect the interests of oDesk. oDesk reserves the right to place a financial hold on and reclaim funds available in the User's account in the event of a material breach of this Agreement. Nothing in this provision should be construed as providing oDesk with the right or obligation to supervise or monitor the actual Services performed by the Contractor.
Quote Quoting 2.9 Hold on funds.
oDesk will make funds deposited in your account generally available for you to use or withdraw. oDesk reserves the right, at its sole discretion, to place a hold on funds for Employer payments to clear or if oDesk suspects monies may be subject to charge back or if fraud is suspected. oDesk will release a hold as soon as deemed appropriate. In cases of fraud, abuse or violation of this Agreement, the oDesk payment guarantee shall be revoked and all monies in the account may be held and/or reclaimed, not just those from the Contract(s) under investigation.
It may be that some of your other clients make claims in association with the cost of a security review or having to stop using portions of your past work due to security concerns.