Bybit Hack Becomes Largest Crypto Theft in History, With $1.4 Billion Stolen

The cryptocurrency world was rocked on Friday as Bybit, a major centralized exchange, confirmed a devastating security breach resulting in the loss of over $1.4 billion in Ethereum and related assets. The hack, now the largest crypto theft on record, has raised serious concerns about the security of digital asset platforms.

The Largest Crypto Heist Ever

Blockchain analytics firm Elliptic confirmed that the Bybit hack surpassed all previous crypto thefts, including the $611 million Poly Network hack in 2021. “This makes it the largest crypto theft of all time, by some margin,” said Elliptic Chief Scientist Tom Robinson. The stolen funds have been flagged in blockchain tracking software in an effort to prevent cashing out through other exchanges.

The attack involved hackers tricking Bybit’s cold wallet signers into approving a fraudulent transaction, granting them control over a significant portion of the exchange’s holdings. Despite the breach, Bybit CEO Ben Zhou reassured users, stating, “Bybit is solvent even if this hack loss is not recovered. All client assets are 1:1 backed, and we can cover the loss.”

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Market Reactions and Withdrawal Surge

Following the attack, Bybit saw an overwhelming number of withdrawal requests. Zhou acknowledged the surge, stating that thousands of transactions were still being processed but assured users that withdrawals would be completed within hours. The hack also triggered market volatility, with Ethereum prices dipping as stolen funds were sold via decentralized exchanges.

Meanwhile, Binance’s former CEO Changpeng Zhao (CZ) advised Bybit to temporarily halt withdrawals as a precaution. Blockchain security firm Arkham Intelligence launched a $50,000 bounty for information leading to the hacker’s identification.

Investigations and Security Concerns

The breach has intensified scrutiny of centralized exchanges, particularly the security of multi-signature cold wallets. Some experts speculate that hackers compromised the computers of wallet signers or exploited vulnerabilities in Bybit’s multi-signature provider, Safe. However, Safe has denied any evidence of its infrastructure being compromised.

Despite the massive loss, Bybit remains operational and is reportedly seeking a bridge loan to replenish lost funds. The hack underscores the ongoing risks within the cryptocurrency industry, reinforcing the need for more robust security measures in digital asset custody.

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US Senators Push SEC to Allow Staking in Crypto ETFs

A bipartisan group of U.S. senators is urging the Securities and Exchange Commission (SEC) to reconsider its stance on allowing staking in cryptocurrency exchange-traded funds (ETFs). In a letter to SEC Acting Chairman Mark Uyeda, the senators argued that including staking could benefit investors by enabling them to earn rewards while securing blockchain networks.

Previously, the SEC under former Chair Gary Gensler had blocked staking in ETFs and taken enforcement actions against firms like Kraken, arguing that it constituted an unregistered securities offering. Now, with new leadership under the Trump administration, lawmakers—including Republican Cynthia Lummis and Democrats Kirsten Gillibrand and Ron Wyden—are calling for a reassessment of the policy.

Supporters emphasize that staking is crucial for the security of blockchain ecosystems like Ethereum, and its inclusion in ETFs could enhance investor returns.

SEC Drops Lawsuit Against Coinbase in Landmark Win for Crypto Industry

The US Securities and Exchange Commission has agreed in principle to dismiss its lawsuit against Coinbase, marking a major legal victory for the exchange and a significant shift in US crypto regulation. The lawsuit, filed in June 2023, accused Coinbase of operating as an unregistered securities broker and named several cryptocurrencies, including Solana and Cardano, as unregistered securities.

Coinbase fought back, arguing the SEC’s case was regulatory overreach, especially after the company’s public listing was approved in 2021. The exchange also led political and advocacy efforts, supporting pro-crypto policies and lawmakers. If the dismissal is finalized, it could reshape the regulatory landscape for the entire crypto industry.