Bybit Restores Reserves After Hack: Secures 447,000 Ether Through Emergency Funding

Crypto exchange Bybit has recently announced that it has replenished its reserves following its staggering $1.5 billion hack, marking the largest breach in the history of the cryptocurrency industry. 

According to a report by CNBC, the exchange managed to piece together “hundreds of thousands” of Ethereum (ETH) in less than 72 hours, utilizing a combination of emergency loans and substantial deposits from various partners.

Bybit Confirms Security Breach During Internal Transfer

It is alleged that the security breach occurred during a routine internal transfer, where Bybit was moving assets from its secure, offline “cold wallet” to a “warm wallet” designed for active trading. 

It was during this transfer that hackers reportedly exploited vulnerabilities in the system, intercepting the transaction and redirecting the funds to an unknown address.

Bybit CEO Ben Zhou reassured users in a post on X that the exchange remains solvent, stating that client assets are fully backed and withdrawals continue to be processed. 

The swift recovery effort involved securing nearly 447,000 ether tokens through emergency funding from firms such as Galaxy Digital, FalconX, and Wintermute. 

A proof of reserves audit conducted by cybersecurity firm Hacken confirmed that Bybit had successfully restored its reserves, ensuring that all major assets—including Bitcoin (BTC), Ethereum, Solana (SOL), Tether (USDT), and CIrcle (USDC)—exceeded a 100% collateralization ratio.

10% Bounty For Stolen Funds

Despite these efforts, the challenge of recovering the stolen assets persists. Blockchain analytics firm Elliptic has identified North Korea’s notorious Lazarus Group as the perpetrators of the attack.

CNBC reports indicate that the stolen funds were dispersed across 50 different wallets, each containing approximately 10,000 ETH, as part of a strategy to launder the coins. 

As of Monday, allegedly more than $195 million in funds—roughly 14.5% of the stolen assets—has already been transferred. Arkham also disclosed that the Bybit hacker is actively laundering funds, executing 2 to 3 transactions per minute and taking breaks every 45 minutes for 15 minutes. 

In an attempt to recover the stolen funds, Bybit has offered a 10% bounty. However, history suggests that the odds of a successful recovery are slim. The Lazarus Group has a well-documented history of laundering stolen crypto to evade international sanctions, allegedly using these funds to support North Korea’s nuclear program. 

In a previous incident in 2022, the group stole $600 million from the game Axie Infinity, but only $30 million was recovered despite significant law enforcement efforts.

The aftermath of the hack has also impacted the cryptocurrency market, with Ethereum—at the center of this incident—experiencing a decline of about 7% in value over the past seven days to trade at $2,500. 

Featured image from DALL-E, chart from TradingView.com