Bybit Covers ETH Gap After $1.4 Billion Hack

The attack, which resulted in losses exceeding $1.4 billion, caused widespread concern among investors. However, swift action by Bybit’s leadership helped stabilize the situation.

In addition to covering the gap, Bybit conducted an updated Proof of Reserves audit. The independent review by cybersecurity firm Hacken confirmed the exchange's solvency and reinforced its financial stability.

How the Biggest Crypto Hack in History Happened

On February 21, Bybit fell victim to the largest crypto hack in history when attackers exploited a vulnerability in one of its offline cold wallets. Although cold wallets are generally considered the safest option due to their offline status, the hackers managed to bypass standard security protocols.

They used a technique called user interface manipulation to alter the logic of a smart contract. This deceptive tactic misled wallet signers, including top executives at Bybit, resulting in the unauthorized transfer of funds to unknown addresses.

Related: Bybit at the Center of the Largest Crypto Hack Ever – Losses Near $1.5 Billion

The hack gained widespread attention due to its scale and technological sophistication. According to well-known on-chain researcher ZachXBT, the North Korean hacker group Lazarus is suspected to be behind the attack. While official confirmation is still pending, the incident exposed the vulnerabilities of even the most secure systems in the cryptocurrency industry.

ETH Reserves Recovered and New Audit Completed

Following the attack, Bybit immediately took action to restore its ETH balance. According to Lookonchain, approximately 446,870 ETH was recovered over the past two days, valued at over $1.16 billion at the time of reporting.

These funds were replenished through loans, large deposits, and substantial over-the-counter purchases from key partners, including Galaxy Digital, FalconX, and Wintermute. This successful recovery allowed Bybit to resume normal deposit and withdrawal operations.

Related: Bybit Replenishes ETH Reserves After Hack, Ethereum Prices Surge

Bybit co-founder and CEO Ben Zhou confirmed that the exchange has fully closed its ETH gap and announced the upcoming release of a new Proof of Reserves report. This report will demonstrate that user assets are backed 1:1 using Merkle Tree technology, which ensures data integrity by verifying information at every level of the hash tree.

Shortly after the announcement, cybersecurity firm Hacken released the results of an independent audit, confirming Bybit’s solvency. The audit showed that even after one of the largest hacks in crypto history, Bybit remains financially stable and fully operational.

Bybit has demonstrated effective crisis management in the face of increasing cyber threats. However, the incident also reveals that there is still room for enhancing the platform’s security measures. According to a new report by Chainalysis, hackers are employing more sophisticated methods and leveraging new technologies like artificial intelligence to execute cyberattacks.

Related: Bybit Reserves Cover Liabilities Despite $4.3B Withdrawals