Bybit Restores Nearly All ETH Reserves Following $1.4 Billion Hack

Bybit co-founder and CEO Ben Zhou announced that the exchange is fully backing client assets on a 1:1 basis after the recent breach. Bybit has closed the gap from a $1.4 billion hack involving its cold wallets.

• A new audited Proof of Reserves report will be released, utilizing Merkle tree verification for customer fund accountability.
• ETH reserves are nearly fully restored, with normal deposit and withdrawal operations resumed.
• Bybit acquired approximately 446,870 ETH (valued at $1.23 billion) through loans, large deposits, and direct purchases post-hack.

Sources of recovery include:

• Over-the-counter (OTC) trading contributing over $430 million
• Direct exchange purchases adding $300 million
• Loans amounting to nearly $300 million
• Transfers from addresses linked to crypto investment firms

The attack utilized a fake user interface to mislead Bybit's system, leading to unauthorized withdrawals. The Lazarus Group, associated with North Korean cyber activities, has been linked to this hack by blockchain investigator ZachXBT, who connected it to previous attacks on other exchanges.

Contrarily, some commentators suggest the incident may be a cover-up for corruption among centralized exchanges related to leveraged ETH positions.