ByBit CEO Confirms 70% of Ethereum Holdings Stolen in $1.5 Billion Hack
ByBit Faces Massive Ethereum Loss Following $1.5 Billion Hack: CEO Provides Details
ByBit, a prominent cryptocurrency exchange, has confirmed that it lost 70% of its Ethereum holdings to a hacker in a $1.5 billion breach. During a Friday livestream, CEO Ben Zhou revealed the extent of the attack, leaving the exchange with a significant blow to its assets. The breach saw over 400,000 Ether mysteriously drained from ByBit’s cold wallet and swapped for other Ethereum derivatives, including mETH and stETH.
What Caused the Hack?
The hack, first flagged by well-known on-chain investigator ZachXBT, involved a sophisticated attack that manipulated the cold wallet’s multisig setup. Cyvers security experts shared insights with CryptoPotato, explaining how the attackers tricked the cold wallet key signers into authorizing a malicious transaction. The attack appeared legitimate to those who signed the transaction, leading them to inadvertently approve the funds’ transfer.
Jack Sanford, CEO of Sherlock DeFi, shared similar findings, suggesting that the hackers modified the rules of the multisig wallet’s smart contract, allowing them to bypass security protocols. While the exact method remains unclear, experts speculate that the UI could have been compromised or that the signers’ devices were hacked, allowing the attackers to gain control unnoticed.
ZachXBT, a leading figure in uncovering large-scale crypto hacks, pointed to the Lazarus Group, a North Korean hacking syndicate responsible for numerous previous crypto exchange hacks. Through analysis, ZachXBT confirmed that the breach was connected to other attacks, including the Phemex hack, strengthening the case against the notorious group.
Can ByBit Cover the Loss?
Despite the magnitude of the loss, Ben Zhou remains confident that ByBit can fully cover all client losses. During the livestream, Zhou reassured customers that “all client assets are 1:1 backed”, ensuring that the exchange would honor all withdrawals and account balances. He tweeted, “We can cover the loss” following the breach.
To address the liquidity crunch caused by the massive withdrawals following the attack, ByBit has already secured 80% of the stolen Ethereum through a bridge loan. Zhou emphasized that this loan would help stabilize liquidity in the short term and prevent disruptions to the exchange’s operations.
Zhou has also rejected calls to pause withdrawals, despite the fear caused by the hack. Binance’s co-founder Changpeng Zhao suggested ByBit pause withdrawals as a precautionary measure to prevent further panic, offering his support if necessary. Zhao remarked, “1.5 billion is fear enough. Better to be safe than sorry now.”
In a lighter tone, BitMEX co-founder Arthur Hayes jokingly called on Ethereum’s co-founder Vitalik Buterin to “roll back the chain” as a means of assisting ByBit. This reference alluded to the controversial decision Ethereum made years ago to reverse transactions following the infamous DAO hack.
What’s Next for ByBit?
While ByBit grapples with the aftermath of the hack, it has made significant efforts to recover and stabilize its operations. The acquisition of a bridge loan provides immediate relief, but the exchange’s long-term strategy will depend on securing further funds and maintaining market confidence.
The attack raises critical questions about security in the crypto space, particularly for exchanges holding substantial amounts of digital assets. As ByBit works to recover, the industry watches closely to see how the exchange navigates this crisis and whether it can uphold its promise of full reimbursement for affected customers.
The hack also serves as a stark reminder of the vulnerabilities within the cryptocurrency ecosystem, highlighting the need for heightened security measures and advanced protective protocols as the sector continues to grow.
