Bybit Hack: Cryptocurrency Exchange Loses $400M in Second-Largest Ethereum Theft

Bybit CEO and founder Ben Zhou addressed the hack during an online chat, assuring users that "your funds are safe."

Cryptocurrency exchange Bybit fell victim to a large-scale hack on Friday, with an estimated $60 million in Ethereum being stolen, the company and blockchain data showed.

The hack, which was among the biggest thefts targeting cryptocurrency exchanges, was spotted in the early hours of Friday morning.

According to Bybit, the attackers exploited security protocols during a transaction, allowing them to move the assets to an unidentified address.

This compromised an offline "wallet" that stored Ethereum, and the hackers stole 400,000 ETH on Friday morning, as per blockchain data firm BlockSec.

At the time of the hack, Ethereum was trading at $2,641.41, making the total stolen amount around $1.۰۵۶ billion.

Bybit CEO and founder Ben Zhou addressed the hack during an online chat, assuring users that "your funds are safe."

The company added on X: "We've launched a refund program for users affected by today's hack. Bybit is committed to protecting our community, and we will fully reimburse all impacted users."

"We have fully recovered the stolen assets and credited them back to the affected users," Zhou stated in a later update.

This marks the second-largest cryptocurrency exchange hack on record. In 2022, attackers stole $326 million in various cryptocurrencies from BitMart, and another $540 million in digital assets from FTX, both of which were later recovered.

Bybit, which was founded in 2018, had $20 billion in client assets as of June 2023, according to the company.

The exchange, which is not licensed to operate in the United States, quickly became one of the top five derivatives exchanges globally.

In 2023, Bybit announced plans to expand its operations in Dubai, following the footsteps of other major cryptocurrency exchanges such as Binance and FTX.

The company also announced its intention to apply for a virtual asset service provider (VASP) license in the United Arab Emirates (UAE).

However, Bybit's presence in jurisdictions with less stringent regulatory frameworks has raised concerns among some industry observers.

"Exchanges like Bybit, operating in offshore jurisdictions with minimal oversight, create an attractive target for hackers due to weaker security protocols and less stringent legal repercussions," said Chris Janczewski, senior cyber threat intelligence analyst at Mandiant Threat Intelligence.

"These exchanges often boast high trading volumes and house billions of dollars in digital assets, making them a lucrative prize for attackers."

"The stolen funds were credited back to the affected users within 24 hours of the hack," Zhou concluded.