Crypto markets took a hit Friday after it was confirmed that major centralized exchange Bybit suffered a massive security breach, resulting in the loss of over $1.4 billion in Ethereum (ETH) and stETH.
The stolen funds were siphoned from Bybit’s hot wallet, with a significant portion quickly being laundered through decentralized exchanges. Bybit co-founder and CEO Ben Zhou confirmed the attack on X (formerly Twitter), explaining that a planned transfer had been tampered with, allowing the hacker to gain access to an ETH cold wallet.
“The signing message was manipulated to change the smart contract logic of our ETH cold wallet,” Zhou stated. “The hacker took control of the specific ETH cold wallet we signed and transferred all ETH to an unidentified address.”
Zhou reassured users that all other cold wallets remained secure and that withdrawals were functioning normally.
Crypto Prices React
Following the news, Ethereum dropped nearly 3% to around $2,727, while Bitcoin saw a minor decline of nearly 1%, hovering at $98,091. Market jitters were amplified as traders processed the implications of such a large-scale exploit.
Security Researcher Flags Suspicious Activity
Even before Bybit’s confirmation, blockchain security researcher ZachXBT highlighted unusual outflows from the exchange, calling it a “security incident” in his Telegram channel. He later revealed that the stolen ETH was being split between 39 different addresses, suggesting an effort to obscure the flow of funds and complicate tracking efforts.
Bybit later provided further details on X, stating that the unauthorized activity was detected when an ETH multisig cold wallet exe cuted a transfer to a warm wallet. However, the transaction was manipulated through an advanced attack that altered the smart contract logic, making it appear legitimate while redirecting the assets to the attacker’s wallet.
Bybit Assures Users of Financial Stability
Despite the staggering loss, Zhou reassured customers that Bybit remains financially stable and solvent.
“Bybit is solvent even if this hack loss is not recovered,” he wrote. “All client assets are 1-to-1 backed, and we can cover the loss.”
While this incident raises fresh concerns about security in the crypto space, Bybit is expected to provide additional updates as the investigation unfolds.
This is a developing story and will be updated as new information becomes available.
