Bybit, one of the world’s leading cryptocurrency exchanges, recently faced a devastating security breach, resulting in the loss of over $1.46 billion in Ethereum. The attack, now considered the largest crypto theft in history, specifically targeted Bybit’s Ethereum multi-signature cold wallet, used for daily trading operations.
How Hackers Exploited Bybit’s System
According to on-chain analytics platform Lookonchain, hackers manipulated a phishing vulnerability to breach the exchange’s signing interface. This allowed them to drain approximately $1.23 billion worth of ETH. The attack sent shockwaves through the crypto industry, raising concerns over the security of centralized exchanges.
Ben Zhou’s Leadership
Despite the staggering loss, Bybit CEO Ben Zhou led the platform through a swift recovery. The exchange acted immediately, securing emergency loans, using investor deposits, and making direct ETH purchases to replace the stolen funds. Within just two days, Bybit announced it had fully restored its holdings, reassuring users that their assets remained safe.
In an X (formerly Twitter) post, Zhou emphasized Bybit’s financial resilience and its commitment to transparency. Major crypto firms, including Binance, Bitget, MEXC, Mirana Ventures, Fenbushi Capital, and MMDWF Labs, stepped in to stabilize liquidity and boost investor confidence. To further reinforce transparency, Zhou confirmed that Bybit would soon release a Proof of Reserves (PoR) audit.
Where Did Bybit Get the Funds?
Bybit recovered the stolen ETH through various sources:
- Private deals: 157,660 ETH ($437.8 million)
- Crypto exchanges: 109,033 ETH ($304.1 million)
- Institutional investors: 47,800 ETH ($127.5 million)
- Bitget loan: 40,000 ETH ($106 million)
- Smaller private deals: 22,609 ETH ($61.8 million)
- Other investor contributions: Between 2,200 ETH ($6 million) and 20,000 ETH ($53.7 million)
This rapid accumulation of funds prevented a liquidity crisis and ensured platform stability.
Does Bybit Still Owe Money?
While Zhou’s leadership has been widely praised, some analysts remain skeptical. Crypto expert Hermes Psychopomp questioned Bybit’s claim of full recovery, arguing that since the exchange used loans, it still carries outstanding obligations. He criticized the industry’s tendency to present partial recoveries as total solutions.
Impact on the Crypto Market
Bybit’s aggressive ETH purchases temporarily increased buying pressure, but once the funds were secured, demand subsided. This contributed to Ethereum’s price dropping from $2,800 to around $2,700. Additionally, Bybit is working with blockchain analysts to track the stolen assets, which are suspected to be in the hands of North Korea’s Lazarus Group. Analysts believe the hackers may use Bitcoin mixers to obfuscate transactions further.
What’s Next for Bybit?
Bybit’s upcoming Proof of Reserves audit will be crucial in restoring investor trust. The exchange has managed to avoid a liquidity crisis, but questions linger regarding its outstanding debts and long-term solvency. The incident highlights both the risks associated with centralized exchanges and the importance of rapid crisis management.
As the crypto industry watches closely, Bybit’s response to regulatory scrutiny and its commitment to user protection will determine its standing in the evolving digital asset landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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