Valve has upgraded the Steam client and they fixed that terrible bug that would allow the application to actually delete every file that was owned by the user.

A user found out the hard way how Steam for Linux was capable of deleting all the files a user owned, after he moved the library from one place to another. The Steam client technically allows users to move their library, and in theory, it should be a simple enough process. Even more, the Linux apps are not bound by registry entries and all kinds of problems, so moving the folder and linking to it should be just fine.

As it turned out, it wasn't. In fact, when the users started Steam, after moving the library, the application ran a script, which should have been ok. The problem was that the script contained a command that would direct Steam to delete the folder it was in. If the script didn't get an answer, it would try to delete the folder and what's in it, with a simple command. Someone at Valve wrote the Bash command wrong, which instructed Steam to delete everything on the computer.

Of course, stuff like the operating system and other components require root access, which is not granted to Steam, but everything else like pictures, songs, backups, and basically any file that didn't have any restriction would be gone.

Just a footnote in the Steam changelog

You can immediately see that this was actually a major issue and that it might have deserved more than just an entry in a changelog, but we'll have to settle with just that. "Fixed a rare bug where Steam could delete user files when failing to start," the developers wrote in the announcement.

Users don't have to do anything special, just start the application and the upgrade will be installed automatically.