Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the news of the recent Bybit hack, which is being referred to as the biggest digital heist in history.
Bybit Hack
On the 21st of February the cryptocurrency exchange Bybit was hacked for $1.5bn (£1.2bn) in what is thought to be the biggest single digital theft in history. The platform is based out of Dubai and noted the attacker gained control of a wallet of Ethereum before they transferred the contents to an unknown address. The theft involved the liquid-staked Ether (stETH), Mantle Staked ETH (mETH), and various ERC-20 tokens.
Blockchain investigators, including Arkham Intelligence and ZachXBT, have linked the attack to the North Korea-affiliated Lazarus Group, the same entity behind the $600 million Ronin network breach. Bybit’s Ethereum multisig cold wallet was compromised through a deceptive transaction that tricked wallet signers into approving a malicious smart contract change, according to the CTO of Cyvers, Meir Dolev. He stated:
“This allowed the hacker to seize control and transfer ETH to an unknown address."
Safe, the wallet service provider, was also impacted although Bybit’s internal systems remained secure. The incident shows the level of threat poised by sophisticated cyberattacks on centralised exchanges. No matter the level of security it seems these hackers are capable of finding a way, as North Korean hackers have been responsible for several high-profile crypto thefts over the past year. This has included the $305 million DMM Bitcoin hack, $50 million hacks at both Upbit and Radiant Capital, and a $16 million heist from Rain Management.
The United States, Japan, and South Korea have jointly sanctioned 15 North Koreans for funding their nation’s nuclear program through crypto-related thefts. Throughout 2024 hacks were the primary cause for the total loses throughout the year, with 98.1% of the $1.49 billion stolen being taken via hacks, and the remainder from fraud.
The Bybit hack ensures 2025 will be even worse on record given the amount taken, and the company immediately sought to reassure its customers following the news. The chief executive noted on social media that Bybit would refund all those affected, even if the hacked currency was not returned. Bybit’s co-founder and chief executive, Ben Zhou, stated on 'X':
“Bybit is solvent even if this hack loss is not recovered, all of clients assets are 1 to 1 backed, we can cover the loss. Though we faced one of the worst hacks in financial history, all Bybit functions remain operational. Our team worked tirelessly to assist clients.”
Zhou went on to add that the company held $20bn in customer assets which would allow them to cover any unrecovered funds either from themselves or via loans from their partners. There are more than 60 million users worldwide on Bybit and it is ranked as the world’s second-largest cryptocurrency exchange by trading volume. However the news of the hack led to a surge in withdrawal requests from customers. Zhou wrote that the company had received more than 350,000 requests from customers to withdraw their funds. He stated this could lead to delays in processing, although 99.9% of withdrawal requests were processed by 1:45 am UTC on the 22nd of February.
According to DeFiLlama, Bybit has shown its financial resilience despite the hack. There has been a total drop of $5.3 billion in its assets, but Bybit’s independent Proof-of-Reserve (PoR) auditor, Hacken, have confirmed that the exchange retains reserves which are greater than its liabilities. Hacken stated on 'X':
“Today’s hack was massive—a tough hit for the industry. But Bybit’s reserves still exceed its liabilities. User funds remain fully backed.”
A number of crypto exchanges assisted Bybit by transferring emergency funds, with Binance contributing 50,000 ETH, Bitget providing 40,000 ETH, and Du Jun, co-founder of HTX Group, sending 10,000 ETH. The hack saw the price of Ethereum drop by almost 4% although it has since returned to its previous levels. The hack occurred when the company was making a routine transfer of Ethereum from an offline “cold” wallet to a “warm” wallet, which covers its daily trading. The hackers managed to exploit security controls and was able to transfer the assets.
Bybit have called on “the brightest minds in cybersecurity and crypto analytics” to help it try to recover the hacked funds and they have offered a reward of 10% of the amount recovered. This could end up costing $140m if the entire hacked amount was retrieved. Zhou said in a statement:
“Bybit is determined to rise above the setback and fundamentally transform our security infrastructure, improve liquidity, and be a steadfast partner to our friends in the crypto community.”
Zhou also outlined that the company has a bounty program, cooperation with law enforcement, and consultations with the Ethereum Foundation to explore potential solutions. He has promised to pursue all possible avenues to recover the funds stolen during the recent hack.
https://x.com/benbybit/status/1893288893711352119
Have a great day.
Peace. CryptoGod-1.
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