The recent Bybit hack, in which attackers stole over $1.4 billion in ETH-related tokens, has become one of the most significant security breaches in crypto history.
While traditional banks are crippled for months in the aftermath of such an event, Bybit’s rapid response and the unity of the crypto industry demonstrate why digital assets differ from traditional banking systems.
Details of the Bybit Attack
The Bybit security breach occurred on February 21. Attackers manipulated a multi-signature cold wallet transaction, presenting a falsified user interface to trick signers into authorizing the transfer. The exploit was highly sophisticated, altering the wallet’s smart contract logic to enable unauthorized withdrawals.
Blockchain sleuth ZachXBT later traced connections between this exploit and the Lazarus Group, a hacking organization linked to North Korea. He suggested a coordinated attack across multiple exchanges.
Prior analysis showed that the “Bybit Exploiter” made unauthorized withdrawals of 400,000 ETH, 90,000 stETH, 15,000 cmETH, and 8,000 mETH. This amounts to about $1.4 billion.
Zach noted that the funds were transferred to an unknown wallet, which converted the stETH, mETH, and cmETH to ETH via decentralized exchanges. Data also shows a transaction of 90 USDT carried out before the attack, which suggested a test transaction.
Speaking on his X account, Ben Zhou, CEO and co-founder of Bybit, reassured users that some wallets remained intact and that the exchange platform was capable enough of covering the losses.
Bybit Vs Banks: Reactions and Aftermath
After the hack, CEO and co-founder Ben Zhou went live to address concerns. He assured users that withdrawals were operating normally and that the remaining funds were secure. The crypto community worked together in unity, with blockchain intelligence firm Arkham Intelligence tracking stolen funds. Firms like Binance also offered to block suspicious transactions.
If this type of hack were to happen to a traditional institution, the chances that the CEO or manager would make a statement are very slim. Instead, withdrawals freeze, branches close, and customers bear the burden of the fraudulent attack.
Interestingly, two days after the attack, Bybit had accumulated over 50% of the stolen funds, amounting to 266,694 ETH (around $746 million). Fund recovery may take longer for traditional institutions due to the need for government approvals and thorough investigations.
Institutions like Bybit are solvent, possessing the necessary assets to cover losses of this magnitude. For traditional institutions like banks, victims of hacks or breaches wait some time before recovering assets.
This incident highlights the disparities between crypto and traditional financial institutions, emphasizing the importance of decentralization and transparency in financial markets.
READ MORE: Future of AI and Blockchain: 3 Coins Leading the Charge
