Bybit suddenly suffered a theft of $1.5 billion, shocking the cryptocurrency community

On February 21, Fortune reported that Bybit, the second largest cryptocurrency exchange by trading volume after Binance, said that Friday's hacker attack cost it nearly $1.5 billion. According to a report by analysis firm Chainalysis, this is the largest theft in the industry's history, accounting for more than half of the total funds lost in hacker attacks throughout 2024.

According to Nansen, the total amount stolen at the time of the theft was $1.44 billion. On-chain tracking of the funds showed that the hacker stole 401,347 ETH from Bybit wallets, worth about $1.12 billion, and staked ETH tokens worth $320 million.

Bybit CEO Ben Zhou confirmed in a post on Friday morning that a hacker had taken control of one of the platform’s offline Ethereum wallets and transferred all its contents to an unidentified address. Data analytics firm Arkham Intelligence confirmed that Bybit recently experienced a $1.4 billion outflow, which the hacker had moved to several different crypto wallets.

Zhou said in X's livestream that news of the hack has spooked Bybit's customers, who are fleeing the platform, resulting in "massive withdrawals." In total, we have received over 350,000 withdrawal requests since the hack (10 hours ago), and so far, there are about 2,100 withdrawal requests pending. Overall, 99.994% of withdrawals have been completed. Despite the worst hack we've ever suffered (banking, crypto, finance), all Bybit features and products are still functioning normally, and the entire team has been up all night fielding and answering customer questions and concerns. All hands on deck.

Asked how many clients would be affected, Shunyet Jan, head of derivatives and institutions, said “right now, everyone is affected.”

As markets reacted, with bitcoin falling 3% and ethereum down 4%, Zhou sought to calm customers’ concerns, saying their assets remained safe. “Even if the losses caused by the hacker are irreversible, Bybit is solvent. All customer assets are backed 1-to-1 and we can cover the losses,” he wrote on X, referring to the fiat or cryptocurrency reserves the company keeps to back its customers’ crypto holdings.

The largest cryptocurrency hack in history

The $1.4 billion hack is the largest in the history of the cryptocurrency industry.

The amount pales in comparison to previous thefts, including the $615 million hack of the Ronin Network in 2022 and the $613 million hack of the Poly Network in 2021. Last year’s largest hack targeted a Japanese cryptocurrency exchange called DMM Bitcoin, which lost more than $300 million.

While the identity of the Bybit hacker remains unclear, the Chainalysis report states that North Korean hackers were behind several major hacks last year and have been traced to other large thefts, including those targeting DMM Bitcoin and Ronin Network.

North Korean hackers are notorious for "employing advanced malware, social engineering, and cryptocurrency theft to fund state-sponsored operations and circumvent international sanctions," the report said.

Will the hackers sell it?

The hacker currently holds over 500,000 ETH, more than the 240,000 ETH held by Ethereum co-founder Vitalik Buterin. The stolen ETH has been dispersed across 53 wallets that are being actively monitored by blockchain security and smart contract audit teams. Given the high-profile nature of the attack, selling such a large amount of ETH is a challenge. Wallets are tracked in real time, making it difficult for the hacker to move funds without being detected.

Furthermore, current market conditions are not conducive to liquidating such a large amount of ETH. If the hacker sells on a large scale, it may trigger a sharp market decline - just like Vitalik Buterin sold his ETH holdings at twice the scale. However, since the hacker obtained ETH at almost zero cost, achieving the highest selling price may not be a priority.

Wider implications for ETH

The hack happened just before ETHDenver, one of the largest annual conferences in the Ethereum ecosystem, where projects typically announce major updates and new versions. ETHDenver has always been a market-positive event, with ecosystem projects announcing their latest developments.

However, sentiment in the Ethereum community has been subdued over the past five weeks, fueled by internal disputes, criticism of Vitalik Buterin, and concerns about the future of the Ethereum Foundation. The hack further dampened enthusiasm, casting a shadow over an event that would normally drive positive momentum for ETH.