In a significant security breach on February 21, 2025, Bybit suffered a loss of approximately $1.5 billion in digital assets, primarily Ethereum.
The breach occurred during a routine transfer of Ethereum from Bybit’s offline “cold” wallet to an online “warm” wallet. Attackers executed a sophisticated manipulation of the transaction process, altering the smart contract logic and masking the signing interface. This deception allowed them to gain control of the cold wallet and transfer approximately 401,000 ETH to an unidentified address. Notably, cold wallets are typically considered more secure due to their offline status.
Bybit’s Response
In the immediate aftermath, Bybit’s CEO, Ben Zhou, addressed the situation publicly, assuring users that the exchange remains solvent and that all client assets are backed on a 1:1 basis. To manage the sudden surge in withdrawal requests—over 350,000 within hours—Bybit processed 99.9% of these requests promptly. The company also secured bridge loans covering 80% of the stolen funds to maintain liquidity and ensure uninterrupted operations.
Impact on the Ethereum Market and Your Funds
The hack immediately impacted the Ethereum market, with ETH prices experiencing a decline of approximately 4% following the news. The unauthorized movement of such a substantial amount of Ethereum raised concerns about potential market volatility, especially if the stolen assets were to be liquidated rapidly. However, the long-term effects on Ethereum’s value will depend on various factors, including Bybit’s recovery efforts and overall market sentiment.
This event highlights the ongoing security challenges within the cryptocurrency industry and serves as a critical reminder for both exchanges and users to assess and enhance their security measures continually.
In Conclusion
Beyond financial concerns, the hack may lead to stricter security measures and policies on Bybit, such as enhanced KYC (Know Your Customer) verification or temporary withdrawal restrictions.
While such changes can improve security, they may also make transactions less convenient for users who prefer quick access to their funds.
This breach has also damaged trust in centralized exchanges, pushing more users toward self-custody solutions like hardware wallets.
