ByBit Suffers Historic $1 Billion Crypto Hack

ByBit Hacked

The cryptocurrency exchange ByBit has experienced its most significant security breach, with hackers stealing over $1 billion worth of Ethereum (ETH). ByBit’s CEO, Ben Zhou, confirmed the incident on social media platform X, stating that the breach affected a single cold wallet while all other wallets remained secure.

Details of the Hack

The attack was first highlighted by Whale Alert, which detected a transfer of approximately 401,000 ETH, valued at around $1.1 billion, to a newly created wallet. The stolen assets were later dispersed across more than 40 different wallets, making tracking and recovery efforts more challenging.

Zhou reassured users that despite the breach, ByBit remains financially solvent and fully capable of covering the losses. He emphasized that all client funds are backed on a 1:1 basis, ensuring the security of user assets.

Industry Reactions and Security Measures

Former Binance CEO Changpeng Zhao (CZ) advised ByBit to consider pausing withdrawals as a precautionary measure. Meanwhile, blockchain explorer Etherscan has flagged the hacker’s wallet addresses, marking them as belonging to the ‘ByBit exploiter.’ The stolen funds have primarily been moved in increments of 10,000 ETH (approximately $27 million per transaction), with the majority now held across 45 different wallets. Estimates of the total loss range from $1.1 billion to as high as $1.4 billion.

How the Breach Occurred

To explain the situation, Zhou hosted a livestream detailing how the incident took place. According to him, the breach happened during a routine transfer between ByBit’s ETH hot wallet and a cold storage wallet, a procedure initiated when the hot wallet reaches a set balance threshold. The company utilizes Safe.global multi-signature wallets for cold storage, and Zhou personally authorized the final transaction.

He confirmed that standard security checks were followed, including verifying the wallet address and ensuring the Safe website’s authenticity. However, an initial transfer of 30,000 ETH eventually escalated to 401,000 ETH. The exact method of compromise remains under investigation, but potential explanations include a breach of the Safe platform or the hacking of multiple signers’ computers, leading to a sophisticated phishing attack.

Response and Next Steps after ByBit incident

In response to the attack, ByBit has temporarily suspended further Safe transactions until the root cause is identified. The Safe platform itself is also reviewing the situation on its end.

The exchange has been processing an unprecedented volume of withdrawal requests, nearly 100 times the usual amount, with 70% of transactions already completed. Some larger withdrawals are undergoing additional compliance checks, and customer support is working through a backlog due to increased demand.

Since the hack primarily affected ByBit’s Ethereum wallet, ETH withdrawals are currently suspended. To address this, ByBit is securing a bridge loan from partners to facilitate ETH withdrawals without purchasing assets on the open market.

Conclusion

ByBit’s breach underscores the ongoing risks associated with cryptocurrency exchanges and the importance of robust security measures. As investigations continue, the exchange remains committed to safeguarding user assets and ensuring operational stability. The outcome of this incident could have lasting implications for the broader crypto industry, particularly in refining security protocols for cold wallet transactions.

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