On Friday, the world’s second-largest crypto exchange, Bybit, became the target of a major exploit that drained roughly $1.4 billion in Ethereum and staked ether from its reserves.
Immediate Response and Assurance
Bybit CEO Ben Zhou broke the news early Friday on X, sharing a link to the Ethereum transaction and reassuring users that the exchange remains solvent—even though the exploited funds cannot be recovered. During a live stream, Zhou emphasized, “Bybit is still processing withdrawals,” and confirmed that all other cold wallets are secure despite the surge in withdrawal requests following the hack.
Tracking the Hacker’s Movements
As news of the exploit spread, Ethereum’s price dropped by about 5% amid heightened market uncertainty. On-chain analysts quickly began monitoring the hacker’s activity. Within hours, Arkham Intelligence reported that the hacker had already shifted funds into multiple wallets and was liquidating millions in staked ether.
Clarifying the Exchange’s Next Steps
In a follow-up stream, Bybit’s Head of Derivatives, Shunyet Jan, addressed rumors circulating on social media regarding the exchange potentially buying Ethereum on the open market. He clarified that while Bybit’s treasury holds sufficient reserves to cover the notional amount, the current liquidity in Ethereum is insufficient. Jan mentioned that securing a bridge loan in Ethereum for customers withdrawing funds might be the more likely solution, and that the team is actively discussing the best way forward.
Attribution to Lazarus Group
In a significant development, renowned pseudonymous blockchain researcher ZachXBT presented compelling evidence within hours of the attack, pointing to North Korea’s Lazarus Group as the culprit. This attribution was validated by Arkham Intelligence, which rewarded ZachXBT with its bounty for investigating the hack. Lazarus Group is no stranger to high-profile crypto heists, having previously orchestrated the nearly $600 million Ronin hack and the $100 million breach of Atomic Wallet in 2023.
A Glimmer of Hope
It’s worth noting that not every crypto hack results in permanent loss. For example, after a $200 million exploit of Euler Finance, the hacker eventually returned all the funds. While it remains uncertain if a similar outcome is possible this time, it underscores that recovery is not always off the table.
This incident not only highlights the vulnerabilities present even in large, reputable exchanges but also the ongoing cat-and-mouse game between cybercriminals and the blockchain community. As the story continues to evolve, Bybit and its users remain on high alert, with industry watchers closely monitoring any further developments.
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