Digital assets exchange Bybit hacked for $1.5 Billion
What happened?
On Friday, March 21, a routine transaction was scheduled between one of Bybit’s cold wallets and a hot wallet. This transaction was set to take place via the Safe platform interface. However, hackers may have gained access to Bybit’s interface and those of the various transaction signers through phishing. This allowed them to intercept the transaction and distribute the assets to a network of addresses under their control.
The hackers managed to steal approximately 401,000 Ethereum, which was valued at around $1.5 billion at the time of the transaction—making it the largest hack in history of digital assets. Investigations are ongoing to determine how this breach occurred, and Bybit has announced that it will release a detailed report in the coming days.
Bybit demonstrated resilience over the weekend, providing clear communication, hosting livestreams with the CEO, and collaborating with industry partners. The exchange has already covered the entire loss through a combination of loans and internal reserves, ensuring that all customer funds remain fully backed 1:1.
Who is behind it?
One of blockchain’s key advantages is the traceability of transactions and addresses. Blockchain analyst ZachXBT was able to link this attack within hours to previous hacks attributed to Lazarus Group, a notorious North Korean hacking collective. This group has also been involved in cyberattacks on Sony Pictures, Vietnam’s Tien Phong Bank, and the Bangladesh Bank.
The primary target appears to remain the digital assets sector, due to its high liquidity, online nature, and relative immaturity, making it more vulnerable to attacks. The U.S. Department of State suspects that the stolen funds are being used to finance terrorism, weapons of mass destruction, and ballistic missile programs.
Impact on Hodl Funds
At Hodl, we also regularly use Bybit’s services. Therefore, we want to clarify any potential impact this hack may have on our funds. In short: Apart from the negative impact on digital asset prices and the market’s reputation, this hack has no direct impact on the assets within Hodl Funds. We store the majority of our digital assets in our own cold wallets and have safeguards in place to ensure that even our algorithmic trading strategies on exchanges are not directly exposed.
Our Security Measures
For the trading within our Actively Managed Funds, we use multiple exchanges, one of which is Bybit. To minimize risks, we only keep funds on an exchange at the time of the transaction and immediately transfer them back to our self-custody cold wallets after execution.
For self-custody storage, we use solutions from Fireblocks, the market leader in institutional security solutions. Within Fireblocks, we have implemented several security measures, including:
• Private key distribution: The wallet’s encryption keys are split among multiple leadership and board members.
• Granular vault access controls: Each vault has customizable security settings, specifying who can authorize transactions.
• Multi-signature authentication: Transactions require multiple approvals before they can be executed.
• Whitelist enforcement: All outgoing transaction addresses must be pre-approved, preventing unauthorized transfers.
For our Algorithmic Trading Bots, we use additional Fireblocks security features. Beyond multi-signature authentication and whitelisting, we further mitigate risk through an escrow mechanism:
• Funds are placed in an escrow account within our self-custody Fireblocks environment, limiting counterparty risk.
• Fireblocks mirrors these balances 1:1 to the exchange, allowing us to trade without direct exposure.
• At the end of each day, trading results are settled.
These measures allow us to trade securely within our funds while minimizing exposure to exchange risks.
Would you like to learn more about our self-custody solutions? Click the button below.
What can you do?
Do you store funds on Bybit or other digital assets exchanges? We strongly recommend keeping your assets in your own (cold) wallets whenever possible. This way, you are protected against exchange hacks or insolvencies. If you prefer to have professionals manage your digital asset investments, you can always opt to invest through a professional investment fund.
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