“This Will Happen Again”: $1.5B Stolen from Major Crypto Exchange

It’s the biggest heist from a cryptocurrency exchange in history. Reportedly, hackers stole an estimated $1.5 billion worth of digital assets from Bybit, a well-known crypto exchange.

According to a CNBC report, the hackers compromised Bybit’s cold wallet and mostly stole Ether. That’s unsettling because cold wallets are offline storage systems and are often recommended a safe way to store digital assets.

Apparently, the stolen cryptocurrency was “quickly transferred across multiple wallets and liquidated through various platforms.” This, of course, will make it more difficult to trace and/or recover the stolen funds.

In an X posting, Bybit co-founder and CEO Ben Zhou attempted to reassure the crypto exchange’s customers. He explained that the hacker(s) “took control of the specific ETH cold wallet we signed and transfered all ETH in the cold wallet to this unidentified address.”

Zhou continued, “Please rest assured that all other cold wallets are secure,” and emphasized, “All withdraws are NORMAL.” The Bybit CEO also sent out a plea: “If any team can help us to track the stolen fund will be appreciated.”

Courtesy: @CryptXL_Trading

It’s been alleged that a group from North Korea was responsible for the Bybit cryptocurrency hack. However, I am unable to confirm or deny that this is true.

This is major news irrespective of who the culprit is. Bybit is the third-largest cryptocurrency exchange, and the $1.5 billion theft represents a historic but unfortunate moment in the story of crypto.

So, how did the hackers manage to steal the digital assets? Meir Dolev, co-founder and CTO of CyVers, explained, “Bybit’s ETH multisig cold wallet was compromised through a deceptive transaction that tricked signers into unknowingly approving a malicious smart contract logic change.”

As you might expect, some Bybit customers withdrew their funds in the wake of the security breach. Moreover, cryptocurrency prices dipped when traders caught wind of the news.

In a subsequent X posting, Zhou continued to attempt damage control. He wrote, “Bybit Hot wallet, Warm wallet and all other cold wallets are fine. The only cold wallet that was hacked was ETH cold wallet. ALL withdraws are NORMAL.”

Courtesy: @BondHack

I’m certainly not trying to compare Bybit to FTX, but this isn’t the first time a major crypto exchange has gone into full-scale damage-control mode. Regardless of how this story turns out in the end, there will still be some reputational damage done.

This isn’t a call to withdraw or liquidate your cryptocurrency assets, by any means. It’s just a reminder that crypto investments always involve a degree of risk.

Taylor Monahan, MetaMask’s lead security researcher, issued a stark warning on this topic. “No one is prepared for the attack vector… This will happen again and again and again,” Monahan cautioned.

Sooner or later, cryptocurrency exchanges will get better at fending off this specific type of hacking activity. Yet, since hacking can be lucrative, the bad actors will undoubtedly find new ways to compromise crypto exchanges’ assets.

What can you do about this? First and foremost, be vigilant to the risks involved with relatively new financial technologies such as cryptocurrency. Along with that, maintain reasonable position sizes with crypto, and even if you’re confident about digital assets, only invest funds that you can afford to lose.