How the $1.5B Bybit Hack Could Impact the Crypto Industry
Analysts already say it’s “the single largest known theft of any kind in all time."
That’s because the recent Bybit cryptocurrency exchange hack, which resulted in a loss of tokens valued at nearly $1.5 billion, completely eclipses the previous most costly crypto scam: the 2022 Ronin Network hack, which resulted in losses totalling $615 million.
The Bybit attack appears to have been initiated after hackers were granted access to an Ethereum “cold wallet” to complete what seemed to be an innocuous transaction. Once inside the network, the bad guys could access and quickly transfer more than $1.4 billion worth of holdings. Bybit quickly assured its users that no other wallets had been infiltrated and that those users who did incur losses were immediately made whole.
"Bybit is solvent even if this hack loss is not recovered, all of the clients’ assets are 1 to 1 backed, we can cover the loss," Bybit CEO Ben Zhou posted on social media.
Hours later, he shared the following:
It remains to be seen how extensive the damage to the Bybit brand is or if the exchange can even bounce back. Zhou admitted that “The real work has just now started.”
But the damage done isn’t limited to Bybit alone. The enormity of the hack could undermine the faith investors now place in other crypto exchanges — if not the entire crypto industry.
Investors On Edge
The Bybit hack is far from an isolated incident. In 2024 alone, hacking cost the crypto more than $2 billion, and last year marked the fourth year in a row where fraud losses exceeded $1 billion.
“As with past hacks, the Bybit breach triggered an investor sell-off,” says Susan Lindeque, CEO of Avestix. “The value of Ethereum — the coin stolen in the latest scam — dropped 8 percent after the news broke. But other cryptocurrencies, including Bitcoin, saw their values drop. Granted, the declines were relatively short-lived, but the hack has investors on edge.”
The unease stems in a large part from Bybit’s market presence. Launched in 2018, Bybit now boasts more than 60 million users and does business in 195 countries, making it the second-largest crypto exchange in the world.
Equally troubling, she says, is the ease hackers had in committing the crime.
“Although the details are still unfolding, it appears the thieves broke into Bybit using a fairly simple malware program,” she says. “Unfortunately, this happens in the world of banking quite frequently, but when it occurs in a highly secure crypto exchange and costs the exchange $1.4 billion, it puts the entire industry on notice.”
‘Deputizing’ the Crypto Community
However, she says, one novel solution may emerge from the disaster: Following the hack, Bybit launched Lazarus Bounty, a website inviting the crypto community to form a high-tech posse.
“It’s a fascinating solution: The site offers rewards to anyone that spots and calls out the hackers behind the scam,” Susan explains. “Once identified, they can be prevented from cashing out their coins. Industry observers are watching to see if it succeeds.” Although it’s after the fact, Susan believes this approach could help deter future hackers.
“A large part of the appeal of cryptocurrencies is the sense of community it offers. It will be fascinating to see if ‘deputizing’ other crypto investors might serve as a deterrence in the future,” she says.
Next Steps
What’s going on in the crypto space this year? Big Ideas 2025, a new eBook from Avestix, dives into today’s crypto landscape. But that’s not all. The eBook also looks at the blockchain industry, AI, quantum computing and more.
