New Delhi: Dubai-based cryptocurrency exchange Bybit has suffered what is being called “the largest hack in crypto history”, with hackers stealing approximately $1.5 billion in Ethereum (ETH) from the platform’s cold storage wallets. This massive breach triggered panic among users, leading to $4 billion in additional withdrawals, pushing the total outflow to an unprecedented $5.5 billion, according to The Economic Times.

Who’s Behind the Attack?

Blockchain analysts suspect the Lazarus Group—a notorious North Korean cybercrime syndicate known for targeting crypto exchanges—may be responsible.

Bybit CEO Ben Zhou swiftly responded to the crisis, reassuring users that:

"Bybit is solvent even if this hack loss is not recovered. All client assets are 1:1 backed, and we can cover the loss."

His transparent crisis management approach earned praise from industry observers.

“Bybit just delivered a masterclass in crisis communications after experiencing the largest hack in crypto history,” a crypto enthusiast shared on X (formerly Twitter).

How Bybit Handled the Crisis

Immediate action taken by Bybit:
Live X Spaces session by CEO Ben Zhou to address concerns
All-hands-on-deck approach to manage withdrawals
Smart wallet features temporarily disabled for security reasons
$3 billion USDT reserves locked in cold wallets (later retrieved)
50% of all exchange funds successfully withdrawn and moved to another secure storage

Despite the initial chaos, Bybit successfully stabilized operations, restoring Ethereum deposits and withdrawals.

"We’re close to 100% on our ETH reserves, and deposits & withdrawals are back to normal," Bybit posted on X.

Could Ethereum Be Rolled Back to Recover Funds?

In response to the unprecedented attack, some crypto leaders suggested reversing the Ethereum blockchain to recover the lost funds. Even Bybit’s CEO explored the idea, consulting with:

• Ethereum co-founder Vitalik Buterin
• Ethereum Foundation

However, Zhou admitted that rolling back Ethereum was nearly impossible due to its decentralized nature.

“It’s not a one-man decision. It should be up to the community.”

Impact on Ethereum & the Crypto Market

Ethereum’s price dropped 4% following the breach.
Bybit's SAFU fund (Secure Asset Fund for Users) has been activated to cover user losses.

Bybit remains committed to strengthening security measures and announced upcoming initiatives to fortify the crypto ecosystem.

“We know where our funds have gone, and we’re committed to turning this experience into an opportunity to strengthen the ecosystem.”

What This Means for Crypto Investors

This historic hack underscores the risks associated with cryptocurrency, even for leading exchanges. It serves as a wake-up call for:

Stronger security protocols in centralized exchanges
Self-custody of crypto assets to minimize exposure to exchange hacks
More robust regulatory frameworks to protect investors

The Bybit hack is a reminder that even the biggest players in crypto remain vulnerable to cybercriminals. The key takeaway? Security in the digital asset space must evolve faster than the threats it faces.