Dubai-based cryptocurrency exchange Bybit fell victim to the biggest crypto theft in history last week when hackers swiped a staggering $1.5 billion worth of Ethereum from the platform’s digital wallets.
Despite the breathtaking scale of the attack, the world’s second-largest crypto exchange by trading volume has now fully restored its reserves and returned to normal operations.
Hackers Break Through Wallet Security During Transfer
The breach occurred during what should have been a routine transfer between Bybit’s “cold” wallet (offline storage) and a “warm” wallet used for daily trading. Attackers took over an Ethereum wallet and whisked away the funds to an unknown address.
The stolen assets were swiftly moved through several wallets. According to blockchain analytics firm Elliptic, the funds were initially sent to 50 different wallets, with each holding nearly 10,000 tokens.
CEO Ben Zhou confirmed the hack on social media, stating: "Bybit is solvent even if this hack loss is not recovered, all of clients assets are 1 to 1 backed, we can cover the loss."
Recovery Efforts Get Underway With Bounty Offer
Bybit has called on “the brightest minds in cybersecurity” to help recover the stolen funds. The company put up a hefty $140 million bounty for ethical hackers who can help bring back the missing crypto.
The exchange created a new interface showing suspicious wallet addresses to help security experts track down the stolen coins. This list comes from work done by top “white hat” hackers and investigators within three days of the theft.
Exchange Rebuilds Reserves In Remarkable Turnaround
In an impressive display of financial strength, Bybit has already fully restored its Ethereum reserves following the attack. The company secured approximately 446,870 ETH through a mix of loans, large investor deposits, and direct purchases.
The exchange bought 157,660 ETH through over-the-counter deals with crypto investment firms Galaxy Digital, FalconX, and Wintermute. It also bought another $304 million worth of ETH from centralised and decentralised exchanges.
North Korean Hackers Likely Behind The Attack
Security experts have linked the attack to North Korea’s infamous Lazarus Group; a state-backed hacking team known for funding the country’s nuclear programme through digital theft.
Blockchain analytics firms Arkham Intelligence and Elliptic have pointed to the group’s involvement, noting that the methods used match their known tactics.
The Lazarus Group was also responsible for the previous record-holder for largest crypto theft—a $615 million hack of the Ronin Network in 2022. That hack now stands as the second-largest in crypto history.
Customers Rush To Withdraw Funds After News Breaks
As word of the attack spread, Bybit processed over 350,000 withdrawal requests within 12 hours. Yet despite this flood of withdrawals, the exchange handled all transactions without major delays.
"Despite the surge in withdrawal requests, the exchange ensured that all transactions were completed without significant delays," the company said. "Bybit's operations quickly returned to normal, with client activity rebounding to pre-hack levels within 24 hours."
Dubai Regulators Keep Close Watch On Events
Dubai's Virtual Assets Regulatory Authority is "actively monitoring" the situation, which it describes as a "highly evolving matter that we will continue to closely track until it stabilises."
Bybit does not yet hold a regulatory licence under VARA but is working towards getting a Virtual Asset Service Providers operating permit. The firm currently is provisionally approved for virtual asset exchange services in Dubai.
The hack comes at an interesting time for stablecoin regulation in Dubai. Just days after the attack, Dubai’s financial authorities approved Circle’s USDC and EURC as the first regulated stablecoins under the Dubai International Financial Centre’s crypto token system.
This incident, though shocking in its scale, shows both the risks and resilience in today’s crypto world.
Bybit, founded in 2018, has grown to serve over 40 million users worldwide and has stood up well to this test of its financial strength and crisis management skills.
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