- Cryptocurrency exchange Bybit experienced a $1.5 billion hack, leading to total outflows exceeding $5.5 billion.
- The exchange’s total assets dropped from $16.9 billion to $11.2 billion, with Hackers suspected to be from North Korea‘s Lazarus Group.
- Approximately 70% of clients’ ether was stolen, forcing Bybit to secure emergency loans for processing withdrawals.
- Safe protocol temporarily suspended smart wallet functionalities, complicating access to $3 billion in USDT reserves.
- Discussions about a potential Ethereum blockchain rollback were considered but remain controversial.
Major cryptocurrency exchange Bybit faces a severe crisis after hackers, believed to be from North Korea‘s Lazarus Group, successfully breached its security and stole approximately $1.5 billion worth of ether from its cold storage wallet. The incident triggered massive withdrawals, resulting in a total outflow exceeding $5.5 billion from the platform.
According to data from DeFiLlama, the exchange’s total assets plummeted from $16.9 billion to $11.2 billion. Bybit’s CEO Ben Zhou revealed during an X spaces session that the hackers managed to compromise roughly 70% of their clients’ ether holdings, necessitating emergency loans to process withdrawal requests.
The situation became more complex when Safe, a decentralized custody protocol, temporarily suspended its smart wallet functionalities. This decision affected Bybit’s access to $3 billion worth of USDT stored in Safe wallets. “We know the cause is definitely around the Safe cold wallet. Whether it’s a problem with our laptops or on Safe’s side, we don’t know,” Zhou explained.
In response to the crisis, the exchange’s team worked through the night to develop custom software based on Etherscan to manually verify signatures and process the mounting withdrawal requests. Within two hours of the breach, the platform faced withdrawal requests exceeding $100,000.
The incident has sparked discussions about potential remedial actions, including a controversial proposal to “roll back” the Ethereum blockchain. While technically possible, such an action would require community consensus and could result in a contentious hard fork, potentially splitting the network into two separate chains.
Singaporean authorities have taken the case seriously, with Interpol reportedly involved in the investigation. Blockchain analysis firm Chainalysis has also been engaged to track the stolen funds. The exchange continues to investigate the root cause of the breach while implementing alternative security measures to replace the compromised Safe cold wallet system.
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