In a shocking turn of events, leading cryptocurrency exchange Bybit has confirmed a major security breach, resulting in the loss of over $1.4 billion worth of Ethereum (ETH). The attack, described as highly sophisticated, targeted one of Bybit’s cold wallets, raising concerns over the security of digital assets held by centralized exchanges.
How the Attack Was Discovered
The exploit came to light after renowned on-chain analyst ZachXBT flagged unusual outflows from Bybit wallets. According to ZachXBT, suspicious transactions amounting to $1.46 billion were observed on Friday, involving the swapping of mETH and stETH for ETH on various decentralized exchanges (DEXs). The scale of the transfers raised immediate concerns within the crypto community.
Details of the Exploit
Following ZachXBT’s discovery, further investigations confirmed that Bybit had fallen victim to a highly complex phishing attack. The exchange’s CEO later acknowledged the breach, providing details on how the attack was executed.
According to Bybit, attackers employed an advanced technique that involved a “musked” transaction. This deceptive method tricked Bybit’s internal team into signing a malicious transaction under the belief that it was a legitimate transfer.
The hackers leveraged Safe, a widely used wallet management platform, to disguise the fraudulent activity. The user interface (UI) presented to Bybit’s team showed a legitimate address and URL, making the transaction appear authentic. However, unbeknownst to the exchange, the actual transaction signed by Bybit contained malicious code that altered the smart contract logic governing the cold wallet.
How the Attackers Gained Access
Bybit explained that the exploit granted the attackers control over the affected cold wallet. The altered smart contract logic enabled the unauthorized transfer of ETH, allowing the hackers to drain the wallet’s entire holdings. Despite the magnitude of the attack, Bybit reassured its users that only one cold wallet was compromised and that all other wallets remain secure.
Bybit’s Response and User Impact
Following the breach, Bybit has taken immediate steps to contain the damage and prevent further security threats. The exchange emphasized that withdrawals remain operational and that the stolen funds represent only a fraction of their overall reserves. This assurance aims to mitigate fears of insolvency or potential withdrawal freezes.
Bybit has not disclosed whether they will be able to recover the stolen funds or if law enforcement agencies are involved in tracking the attackers. However, given the scale of the hack, investigations are likely underway to trace the stolen ETH across blockchain transactions.
Conclusion
The Bybit hack serves as a stark reminder of the evolving threats in the cryptocurrency industry. Despite robust security measures, even major exchanges remain vulnerable to sophisticated attacks. The incident highlights the importance of continuous vigilance, advanced security protocols, and user education to prevent similar breaches in the future.
Crypto users and investors are advised to stay updated on further developments as Bybit continues its investigation into the attack. The broader crypto community will be closely watching how the exchange recovers from this significant loss and whether the stolen funds can be tracked and retrieved.
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BREAKING NEWS: Bybit crypto exchange hacked, $1.4 billion $ETH and $stETH stolen.
— Nigeria Stories (@NigeriaStories) February 21, 2025
