Inside Bybit's Recovery: The Exchange Plan for Stability and Growth

06 Mar 2025 by Sharlife
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Bybit Recovery Process After the $1.5 Billion Hack

In February 2025, Bybit faced a monumental challenge when it suffered a record-breaking hack resulting in the theft of approximately $1.5 billion. The hack occurred during an internal transfer from a secure "cold wallet" to a "warm wallet," where hackers exploited security vulnerabilities to intercept and reroute funds. Despite the severity of the breach, Bybit demonstrated resilience and efficiency in its recovery efforts.

Immediate Response

  1. Emergency Loans and Deposits: Bybit rapidly replenished its reserves by securing hundreds of thousands of ether tokens through emergency loans and significant deposits from partners like Galaxy Digital, Wintermute, and other firms.
  2. Withdrawal Continuity: The exchange maintained operational withdrawals, ensuring customer assets remained accessible throughout the crisis.

Recovery Efforts

  • Freezing Stolen Funds: Bybit collaborated with other platforms to freeze suspected stolen funds. This effort led to the successful recovery of over $40 million in collaboration with platforms like CoinEx, Circle, and Tether.

  • Bounty Program: Bybit launched a 10% bounty program to incentivize ethical hackers and cybersecurity experts to assist in recovering the stolen funds. This initiative could potentially yield up to $140 million if the full amount is recovered.

  • Proof-of-Reserves Report: Bybit announced plans to publish a new audited Proof-of-Reserves (POR) report to demonstrate its restored reserves and maintain transparency.

Challenges and Progress

  • Asset Recovery: Despite the progress in restoring operational capacity, recovering the stolen assets remains a significant challenge. Blockchain analysis firm Elliptic attributed the attack to North Korea's Lazarus Group, known for laundering cryptocurrency to evade sanctions.

  • Restoration of Assets Under Management (AUM): Bybit has successfully restored 77% of its AUM to pre-incident levels, highlighting its robust recovery process.

User Support and Transparency

  • Customer Assurance: Bybit's CEO, Ben Zhou, reassured users that client assets were fully backed and that withdrawals remained operational throughout the incident.

  • Transparency: The exchange maintained open communication with users, providing updates on recovery efforts and future plans to enhance security and transparency.

Conclusion

In summary, Bybit's recovery process involved swift replenishment of reserves, collaboration with other platforms to freeze stolen funds, and a bounty program to encourage recovery efforts. Despite the challenges, Bybit has demonstrated resilience and transparency, restoring a significant portion of its assets and maintaining operational continuity.